This $105 Million HNA Bond Is Taking Investors on a Wild Ride

(Bloomberg) -- As China’s sprawling HNA Group Co. faces some $16 billion in asset sales, a look at the roller-coaster ride for one of its dollar bonds helps illustrate its struggle.

Since the conglomerate took full effective control of Pactera Technology International Ltd. from Blackstone Group LP in the first half of 2017, its April 2021 notes have climbed and fallen as the issuer ran into challenges attempting to redeem them.

S&P Global Ratings downgraded the notes by two steps to CCC+ on Tuesday -- deep into junk territory. Pactera is only a “moderately strategic” subsidiary of HNA Group, which is unlikely to provide any additional financial support if the unit falls into financial distress, it said.

  • HNA’s acquisition of Pactera triggered a change-of-control offer for the 2021 notes in March last year; Pactera bought back $169 million of them in a tender, funded by a $105 million loan from HNA, according to Moody’s Investors Service
  • Pactera then issued a notice in late September to redeem the remaining $105.6 million of the notes at 106 cents on the dollar on Nov. 28, subject to sufficient financing
  • The call date has since been deferred twice as conditions weren’t met, first to Jan. 27 and then to March 26, causing wild swings in the prices, according to Bloomberg data
  • Another delay past April 15 would allow Pactera to call them at 104 cents
  • An HNA representative didn’t respond to phone calls seeking comment

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