ASIA-PACIFIC
CHINA
MOODY’S DOWNGRADES YIDA CHINAMoody’s has downgraded YIDA CHINA HOLDINGS
following the announcement of an
EXCHANGEûOFFERûANDûCONSENTûSOLICITATIONûFORû
the property company’s US$300m of 6.95%
bonds due April 19.
The rating agency last Monday cut Yida’s
corporate rating to Caa2 from Caa1 and
downgraded the senior unsecured dollar
bonds to Caa3 from Caa2, stating that it
considers the planned transaction a
DISTRESSEDûEXCHANGEû4HEûOUTLOOKûISû
negative.
The previous week, S&P cut Yida’s
company rating to CC from CCC– and the
rating of its bonds to C from CC. The
OUTLOOKûISûNEGATIVE ûREmECTINGûTHEûLIKELIHOODû
that it could downgrade the rating to
selective default once the transaction is
completed. Fitch downgraded the company
and the bonds to C from CCC.
Yida warned that it may need to
RESTRUCTUREûITSûDEBTûIFûTHEûEXCHANGEûOFFERûISû
unsuccessful.
Under the offer, holders that tender their
bonds will receive US$80 in cash per
US$1,000 in principal amount and US$920
in new bonds due 2022, with a put option in
March 2021.
The new bonds will pay 10% annual
INTERESTûFORûTHEûlRSTûSIXûMONTHSûANDûûAû
year thereafter.
The property developer will not go ahead
WITHûTHEûEXCHANGEûUNLESSûATûLEASTû53M û
or 75%, in principal amount of the 2020s are
tendered and accepted.
Admiralty Harbour is dealer-manager for the
EXCHANGEûOFFER ûWHICHûENDSûONû-ARCHûû9IDAûis also seeking consent from bondholders to
waive their claims under the old notes.
)FûTHEûEXCHANGEûOFFERûISûNOTûCOMPLETED û
Yida said it may hire Admiralty Harbour as
lNANCIALûADVISERûTOûIMPLEMENTûANû
alternative debt restructuring, as the
company’s resources may not be enough to
redeem the bonds.
9IDAûSAIDûITûEXPECTSûTOûBEûABLEûTOûREPAYûTHEû
NEWûNOTESûIFûTHEûEXCHANGEûOFFERûGOESû
through.ANTON OILFIELD EXCEEDS TENDER
TARGETANTON OILFIELD SERVICES GROUP said holders of
US$102.737m in principal amount, or34.25% of its US$300m 9.75% December 2020
notes, have accepted a tender offer.
The company has raised its initial
US$100m cap for the offer and will buy all
validly tendered bonds.
It will pay US$1,018.75 plus accrued and
unpaid interest in cash for each US$1,000 of
PRINCIPALûAMOUNTû3ETTLEMENTûISûEXPECTEDûONû
March 9.
Separately, the company has also
repurchased US$4m of the 2020 notes in the
market.
As a result of both operations, the
outstanding size of the 2020 notes will be
reduced to US$193.263m.
4HEû(ONGû+ONG
LISTEDû#HINESEûOILlELDû
services provider said the internally funded56 International Financing Review March 7 2020ALL INTL EMERGING MARKETS BONDS
BOOKRUNNERS: 1/1/2020 TO DATE
Asia-Pacific
Managing No of Total Share
bank or group issues US$(m) (%)Excluding equity-related debt.
Source: Refinitiv SDC code: L41 HSBC 62 6,166.57 7.3
2 Standard Chartered 42 4,412.64 5.2
3 Credit Suisse 39 4,211.06 5.0
4 Citigroup 34 4,070.59 4.8
5 UBS 32 3,738.93 4.4
6 Bank of China 40 3,011.91 3.6
7 DBS Group 32 2,787.54 3.3
8 Deutsche Bank 27 2,763.50 3.3
9 Credit Agricole 25 2,704.91 3.2
10 Barclays 34 2,630.37 3.1
Total 175 84,159.67HNA Group calls in state support
CHINA Fitch warns creditors not to expect full repaymentThe Hainan provincial government has stepped
in to manage a liquidity crisis at HNA Group after
the coronavirus outbreak added to the woes of
the debt-laden conglomerate.
The group, with total debts of more than
Rmb500bn (US$72bn) as of June 2019,
according to Fitch, sought assistance from the
authorities because it could not deal with the
liquidity risks by itself, it said in a statement
posted on its website on February 29.
HNA controls stakes in a number of Chinese
carriers, including Hainan Airlines, and has taken
a hit from widespread flight cancellations as a
result of the outbreak.
Its liquidity will be managed by a working
group comprising representatives from units
of the Hainan government, the country’s civil
aviation administrator and China Development
Bank, according to the statement. Fitch
described it as an effective state takeover.
The move, however, falls short of a full bailout
of HNA’s liabilities, leaving the group’s various
creditors waiting for more details.
Fitch expects creditors to face losses of varying
scale during the restructuring, warning that
the unusual scale of the group and its debt will
complicate the task.
“Nevertheless, the case may indicate the
government’s approach to issues associated with debt
restructurings in China, including those of entities with
implicit or explicit state support,” Fitch said.
The working group is led by Gu Gang,
chairman of Hainan Development Holdings, an
investment arm of the Hainan government. Gu
has also been appointed HNA Group’s executive
chairman following a reshuffle of the Haikou-
based group’s board of directors. Co-founder
Chen Feng will stay on as chairman.
Ren Qinghua, director of the Hainan Yangpu
Economic Development Zone, another memberof the working group, was appointed as co-CEO
alongside Tan Xiangdong, HNA Group’s existing
CEO.
The conglomerate has struggled with its huge
debts since late 2017 following an aggressive,
debt-fuelled global M&A expansion. It has been
trying to sell down assets in recent years.
Last month, Bloomberg reported that the
Chinese government may take over the group
and sell off its airline assets because the
epidemic has further reduced its ability to meet
its financial obligations.
Sean Hung, a senior analyst at Moody’s, said
the creation of a working group to ease HNA
Group’s liquidity issues is credit positive for
both financial institutions and aircraft lessors,
because it will help support an orderly resolution
and restructuring of the group, in addition to
reducing financial contagion risks.
“We expect financial institutions, including
banks and aircraft lessors, will need to
provide financial support to HNA in the form
of refinancing and rental payment relief, as
well as extensions to loan maturities per the
government’s direction,” said Hung.
“However, these measures do not necessarily mean
all of HNA’s debt and assets will be taken over by the
government. We expect the working group will likely
divest some of HNA’s assets, for example, certain
equity stakes and non-core assets, to improve HNA’s
financial position for debt repayment, and ultimately
look for strategic investors after the clean-up.”
HNA Group’s US$200m of 6.25% bonds due
2021, issued through HNA Group (International)
in 2016, gained 1.625 points in price terms to
be bid at 73.125 on March 2 on the government
takeover action, according to Refinitiv data. The
cash price of the bonds has rebounded by more
than 10 points from as low as 61 in late January.
Carol Chan8 IFR Emerging 2323 p 55 - 62 .indd 56 06 / 03 / 2020 19 : 04 : 33