China Huarong Tells Media It’s Prepared to Make Bond Payments

Embattled bad-debt manager China Huarong Asset Management Co. has ample liquidity and is prepared to make its bond payments, an executive told local media after weeks of uncertainty over the company’s future.

Recent rating downgrades by international agencies “have no factual basis” and are “too pessimistic,” Xu Yongli, Huarong’s vice president and board secretary, said in an interview with the state-run Shanghai Securities News on Friday. The company is in a good financial position and has made proper arrangements and adequate preparation for its future bond payments, he added.

It’s the first time Huarong, which has $22.9 billion of outstanding offshore debt, has publicly commented on its finances and ability to meet obligations since delaying releasing its 2020 results at the start of the month. That had fueled investor concern over the company’s liquidity and whether it will receive government support, triggering a rout in its bonds that jolted Asian credit markets.

Huarong is operating normally with support from the finance ministry, which controls the company, and there is no evidence indicating a change to its shareholding structure, nor any signs of change in the government’s support for it, Xu said. The support Huarong has obtained from the government is “no different” from other enterprises.

The company is now actively working with auditors to release its 2020 results as soon as possible, Xu told the Xinhua News Agency-owned newspaper. The interview was also shared by the firm’s official WeChat account.

Xu’s remarks echo comments by the China Banking and Insurance Regulatory Commission, which said earlier this month Huarong is operating normally and has ample liquidity. That failed to allay concerns among international investors, prompting rating agencies including Fitch Ratings and Moody’s Investor Service to downgrade the company’s ratings this week.

The ratings agencies lack a comprehensive understanding of the company and the environment it’s operating in, Xu said. He called on the market and investors to be “rational.”

©2021 Bloomberg L.P.

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