HNA’s airline unit scraps bond sale

Bloomberg

Chinese conglomerate HNA Group Co.’s flagship carrier cancelled a planned bond sale after weeks of soaring interest rates that had forced the debt-laden group’s units to pay some of their highest borrowing costs ever.
Hainan Airlines Holding Co. had planned to sell $151.2 million of the perpetual securities in China’s local market to repay maturing debt, according to a prospectus on the Chinamoney website. The cancellation comes amid growing strains for HNA Group from a debt-fuelled $40 billion acquisition spree across six continents.
The deals have invited scrutiny from regulators across the globe and put the company in the crosshairs of a Chinese government that’s clamping down on capital outflows.
HNA Chief Executive Officer Adam Tan said that the firm is considering selling assets in a sign that it’s capitulating to government pressure by reversing the string of acquisitions.
The company’s deals made it the top shareholder of Deutsche Bank AG and Hilton Worldwide Holdings Inc.
“Our company decided to cancel this bond sale due to the market environment, as we’re getting toward the end of the year,” the Hainan Airlines unit said in a reply to questions from Bloomberg News.
“Hainan Airlines has a sound business operation.” HNA’s shopping spree has left units like Hainan Airlines increasingly reliant on smooth access to funds in the bond market to help refinance their borrowings.
The conglomerate’s interest expenses more than doubled to a record 15.6 billion yuan in the first half from a year earlier. Its short-term debt expanded to 185.2 billion yuan, exceeding its cash-pile. Borrowing costs have surged in China’s local market.