Struggling Chinese conglomerate HNA Group Co. faces rising bond maturities later this year even if it’s able to navigate current difficulties in repaying debt to banks.
HNA is under mounting pressure as several banks are said to have frozen some unused credit lines to its units after missed payments. That follows a $40-billion-plus buying spree that saw the conglomerate emerge from obscurity to take large stakes in companies including Deutsche Bank AG and Hilton Worldwide Holdings Inc. in recent years.
The bill on maturing offshore and onshore notes for the group and its units will swell to more than 12 billion yuan ($1.88 billion) in both the third and fourth quarters, from 1 billion yuan this quarter, Bloomberg-compiled data show. This debt wall is all the more problematic because the yields on some of its bonds have surged to about 20 percent, the highest since they were sold.
HNA officials couldn’t be immediately reached for comment by telephone or email. While concerns about the company’s ability to repay debt have mounted, Goldman Sachs Group Inc. said that HNA’s cash-generating assets will probably enable it to service bond payments.
The conglomerate’s debt burdens weren’t always this big. Average quarterly bond maturities for HNA and its units in the past two years totaled 6.2 billion yuan, and were 12.3 billion yuan in the final quarter of 2017, according to data compiled by Bloomberg.
Six HNA units have suspended share trading this month, pending planned announcements. HNA Group International’s 2019 bond lost 5.2 cents on the dollar last week and fell to a record low of 81 cents on Tuesday.
