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HNA Group repays dollar bond after missing yuan note payment

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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.

[HONG KONG] 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 US$300 million bond due Aug 18, a company spokesman told Bloomberg, saying "we remain committed to meeting our financial obligations". REDD reported last week that the Hainan government would provide one billion yuan (S$196.3 million) to HNA Group to help it repay that bond.

"It is noteworthy that distressed conglomerates like HNA continue to honour 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 US$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.

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HNA Group has 17.2 billion yuan of onshore bonds outstanding, Bloomberg-compiled data shows. It has also has US$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.

BLOOMBERG