HNA Group Repays Dollar Bond After Missing Yuan Note Payment

(Bloomberg) -- HNA Group Co. repaid a dollar-denominated bond on Monday amid a report China’s provincial government offered to help the debt-laden conglomerate meet payments to its offshore creditors.

HNA Group International, a unit of HNA Group, repaid a $300 million bond due Aug. 18, a company spokesperson told Bloomberg, saying “we remain committed to meeting our financial obligations.” REDD reported last week that the Hainan government would provide 1 billion yuan ($142 million) to HNA Group to help it repay that bond. Its $200 million bond due 2020 rose to a three-week high in Hong Kong.

“It is noteworthy that distressed conglomerates like HNA continue to honor their offshore USD debt,”said Owen Gallimore, Singapore-based head of credit strategy at Australia & New Zealand Banking Group Ltd. “Given the deluge of other problems to deal with, a major conglomerate offshore bond default appears to be something the government is keen to avoid at present.”

The troubled conglomerate has faced an uphill struggle to fix its bloated debt load despite agreeing to sell more than $25 billion in assets since the start of 2018. In April, creditors of the firm took the extraordinary step of seizing golf courses and other assets after a unit reneged on a loan payment. Then it failed last month to repay a 1.5 billion yuan bond.

New onshore company bond defaults in China have reached 76.7 billion yuan so far this year, while offshore defaults amounted to $1.77 billion, according to data compiled by Bloomberg.

HNA Group has 17.2 billion yuan of onshore bonds outstanding, Bloomberg-compiled data show. It has also has $700 million of dollar bonds sold by its unit HNA Group International Co.

The conglomerate remains in a “liquidity crisis,” according to Everbright Securities Co. in a note. “2019 is another year when HNA faces a peak in debt maturities, which leaves it limited room for negotiation,” said Zhang Xu, a fixed-income analyst at Everbright.

--With assistance from Molly Dai.

To contact the reporter on this story: Ina Zhou in Hong Kong at hzhou179@bloomberg.net

To contact the editors responsible for this story: Neha D'silva at ndsilva1@bloomberg.net, Chan Tien Hin

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