MTR will likely seek more funds for railway expansion

The downturn in the real estate market forces the company to seek financing externally.

MTR Corp. Ltd. (MTRC) will see growing financing needs in the next two to five years as it’s responsible for expansion of several railways in Hong Kong, according to a report by S&P Global Ratings

In addition to the Northern Link main line which will start in late 2025 and cost $31.4b, the company also runs five projects under construction.

MTRC adopts a rail-plus-property model, for the Northern Link main line project, the government compensates its investment by providing $39.05b in land premium for the company.

However, the long-term downturn in Hong Kong's real estate market will increase MTR's demand for external financing, said Kendrew Fung, credit analyst at S&P Global Ratings.

In 2025, MTR issued its first US dollar-secured subordinated perpetual securities and bonds to balance its capital structure and cope with the interment cycle, breaking the five-year sluggish market.