HNA extends loan in nick of time
Loans Most lenders agree to three-month extension of US$450m bridgeBy yAN JIANGChinese aviation-to-property
conglomerate HNA GROUP said
on Friday it had partly repaid
a HK$3.5bn (US$449m) loan
and won consent to extend
the remainder ahead of its
maturity.
HNA paid back HK$700m
and has extended the balance
HK$2.8bn for another three
months.
In an emailed statement, the
company said: “With some of
the procedures needing more
time to complete, after friendlynegotiations, the banks and
the company have agreed to
extend the bridge loan for three
months to February 23 2018.”
HNA did not disclose the
fees it paid for the extension. It
was also not immediately clear
which lenders have been repaid
and which banks have agreed
to the extension.
The Hainan island-based
group’s financing activities
have come under scrutiny
this year amid a regulatory
campaign to cool capital
outflows. HNA is facing heavy
repayment obligations andrising funding costs after a
debt-fuelled acquisition spree
in recent years, but recent
financings show it can still
access the capital markets,
reducing the risk of default.
Earlier this month, HNA
raised US$300m through 363-
day notes that carry a 8.875%
coupon – significantly higher
than the 140bp all-in pricing it
paid on the HK$3.5bn club loan.
The one-year bullet loan was
originally signed with three
Hong Kong-based banks in
November 2016 to finance part
of HNA’s acquisition of a landplot in the city’s Kai Tak area.
Bank of East Asia was the
facility agent on the HK$3.5bn
borrowing and had taken a
final hold of HK$2.4bn on
signing. Nanyang Commercial
Bank and Chong Hing Bank
had committed HK$600m and
HK$500m, respectively.
Sources said some other
lenders had come into the
transaction later through
secondary-market purchases.
HNA borrowed HK$7.32bn
combined through three other
bridge loans to purchase three
more plots, also in the Kai
Tak area. These three one-
year facilities of HK$2.5bn,
HK$2.6bn and HK$2.22bn come
due respectively in January,
February and June. Adani Abbot attempts hard sell
Bonds Controversial Australian coal port markets debut US dollar notesBy JOHN WEAVERSADANI ABBOT POINT TERMINAL is
marketing its first US dollar
bonds amid continued criticism
of its parent’s Australian coal
projects.
The coal-terminal operator,
part of India’s Adani Group, will
wrap up a roadshow for the US
dollar 144A/Reg S senior secured
bonds in New York and Boston
on November 27-28, following
last week’s investor meetings
in London, Hong Kong and
Singapore.
Stifel, Investec and Chinese
broker Haitong International make
up an unlikely team of leads
for the extensive marketing
effort, which aims to overcome
the difficulties AAPT faces in
Australia.
Australian investment banks
and leading international
banks active Down Under
have shunned the issuer,
fearing reputational risks
in associating with Adani
Group’s coal-producing
projects. Environmental group
Greenpeace has called the
group’s planned Carmichael coal-
mine project, which will export
coal via the Abbot Point port, a
“death sentence” for the GreatBarrier Reef.
AAPT’s credit fortunes have
improved this year, however,
with both Moody’s and S&P
revising their respective Ba
and BBB- AAPT ratings outlooks
to stable from negative, while
Fitch assigned a first time BBB-
rating with stable outlook on
November 21 for the upcoming
144A/Reg S senior secured bonds.
Fitch said the rating had the
support of stable cash flows from
the medium to long-term “take-
or-pay” contracts with the port’s
users, but was contained by the
port’s reliance on coal.
The new bond is being sold
as an investment-grade offering,
rated BBB-/BBB- (S&P/Fitch).
“This is going to be a
difficult sell that will require
a compelling yield given
the absence of heavyweight
bookrunners and Adani’s
environmental and legal battles
in Australia, which are only a
Google click away for potential
investors,” said a DCM manager
not involved in the deal.REFINANCING PRESSURE
Adani Group’s unpopularity in
Australia was on full display
on October 7, when thousands
protested against its A$16.5bn(US$1.26bn) Carmichael coal
mine in Queensland and its
request for a near-A$1bn
taxpayer loan to build a railway
line to the Abbot Point coal port.
AAPT has still to finalise a
bank refinancing loan of up to
A$500m arranged by financial
adviser IDFC Singapore that was
launched back in August and
needs the new US dollar bonds
to refinance an Australian dollar
medium-term notes maturing
on November 1 2018. Those
notes, with just under A$400m
outstanding, were last quoted
at 100.189 for a yield of 6.29%,
according to MarketAxess prices.
AAPT no longer has access to
Australia’s conservative bond
market, in benchmark size
at least, after Moody’s cut the
Queensland coal-port operator’s
rating two notches to Ba2 in
March 2016, a move many
analysts saw as overdone.
Moody’s cited severe and
ongoing pressure facing the coal
sector, which had weakened
the creditworthiness of AAPT’s
coal mining counterparties – the
terminal’s only source of cash
flows – as well as an increased
likelihood of AAPT’s existing
contracts being terminated early
or not renewed.The Moody’s downgrade
triggered a 100bp coupon step-up
to 6.75% from 5.75%.
AAPT roadshowed potential
Singapore dollar and Swiss franc
bonds in April and May 2014, but
came away empty handed.
It returned to Australia
for A$100m six-year notes in
May 2014 placed by arranger
FIIG Securities, Australia’s
largest specialist fixed-income
broker. This bond’s coupon
also increased by 100bp to 7.1%
from 6.1%, following Moody’s
downgrade, and was last quoted
at 100.50.
Investors in the November
2018s and May 2020s appear
relaxed about getting their
money back with both notes
trading close to par for the last
12 months. The last Aussie dollar
bond default was back in 2001.
AAPT noteholders may derive
some comfort from an ABC
report that says Adani Group is
close to securing financing for
its Australian mine and railway
project from Chinese state-
owned enterprises, banks, and
export credit agencies.
Adani Group has responded
to the ABC report to say it is
examining several possible
sources of funding, but still
needs support from the federal
and state governments, including
the controversial A$900m loan
from the Northern Australia
Infrastructure Facility. News
10 International Financing Review Asia November 25 20171019_04 News.indd 10 24/11/2017 21:54: