Some HNA Group board directors and senior managers have bought offshore dollar bonds guaranteed by the Chinese conglomerate in the latest effort to shore up its finances.
The aviation-to-financial group did not name the buyers or the value of the bonds purchased and declined to provide any additional information when contacted by Reuters.
S&P Global Ratings has downgraded the credit profile of HNA Group and two of its units, citing a “deteriorating liquidity profile” as it faces mounting debt maturities this year.
After announcing $50bn of deals over two years, HNA was, like other Chinese firms, hit by increased scrutiny of its finances as Beijing grew wary of its acquisition spree.
Hainan-based HNA has since said it would sell some of its assets, and this week announced a $2bn deal for two Hong Kong land parcels.
Sources have said it is in talks with creditors about its outstanding loans.
In a statement on Wednesday, HNA said it was in a “very healthy financial position” with total assets of 1.5tn yuan ($236bn) at end-2017, and that its staff purchased the bonds due to “full confidence” in its business prospects.
In the last couple of years, HNA and its units have issued bonds, both in China and overseas, to finance some acquisitions as well as to refinance some of its maturing debt.
Hainan Airlines Holdings, the group’s flagship firm, has bonds issued worth $4.8bn, denominated in both Chinese yuan and US dollars, according to Thomson Reuters data.
About $1.5bn will mature in 2018.
HNA Group itself has about $16bn worth of bonds outstanding, of which $2.4bn will come up for repayment this year and $4.8bn in 2019, the data showed.
A $52mn tranche, issued offshore, will be due on July 18.
In November, the group sold a short-dated bond at a coupon of 9%, higher than the 8% yield indicated on its December 2018 bond, underlining the pressure to refinance its debt-laden balance sheet.
The yield on a group unit’s three-year, December 2018 bond has nearly tripled from a year-ago, underscoring investor concerns and raising future borrowing costs.
In December, senior executives of HNA agreed to purchase $13mn worth of shares in another group subsidiary Bohai Capital Holdings to bolster “investor confidence” and promote stability.
Bohai is one of many HNA listed units that have suspended trading in their shares, pending announcements. Rating agency S&P cut HNA’s credit profile by one notch to ‘ccc+’, a “speculative grade”, on Tuesday.
“While it appears to have made some progress, and has valuable assets and highly liquid stakes in public traded companies, in our view HNA Group is dependent upon favourable market conditions to meet its upcoming financial commitments,” S&P said in its report on the group as well as some units
S&P also lowered the credit rating of HNA’s IT outsourcing unit Pactera and airline caterer Gategroup Holding, as a result of the downgrading of the parent’s credit profile.
It said it expects Pactera’s debt leverage to remain high and its cash inflows to fall short of its outflows over the next 12 months.
The company would need to raise new funds to meet its upcoming debt obligations, S&P said.
HNA Group declined to comment on S&P’s move.
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