China’s HNA buys back bonds, bank flags repayment issue

China’s HNA Group said it had repurchased some of its bonds and planned to buy back more as one of the country’s biggest banks stated the acquisitive conglomerate was experiencing repayment troubles.

In a statement issued late on Friday, China Citic Bank Corp said that HNA Group was “experiencing temporary liquidity difficulties”, including difficulty repaying a commercial acceptance bill pledged by Hainan Airlines Holding Co, the conglomerate’s flagship carrier.

Citic Bank had “expressed concern” and was working with HNA Group “to resolve the issue,” it said in a statement.

When contacted by Reuters late on Friday, HNA denied that the group was facing any temporary liquidity difficulties or there was any repayment delays. It said its cooperation with Citic Bank was “fully normal”.

HNA’s US$50 billion worth of deal-making in the past two years has sparked intense scrutiny of its opaque ownership and use of leverage. In June, the Chinese government told major banks to review their credit exposure to HNA and a handful of other non-state companies, putting pressure on its finances.

The airlines-to-financial services conglomerate said in a statement it had repurchased the bonds due to the “impact of recent market fluctuations” on prices but did not provide further details about the repurchases.

But HNA said it believed its finances were “stronger than ever” and that its debt-to-equity ratio now stands at 59.5 per cent, compared with 82 per cent seven years ago.