January 11, 2019 / 6:15 AM / 5 months ago

Bonds of HNA's Hong Kong Airlines surge after payment reassurance

HONG KONG, Jan 11 (Reuters) - Prices of some perpetual bonds issued by debt-laden Chinese conglomerate HNA Group Co Ltd’s Hong Kong Airlines leapt on Friday after the carrier said it would be able to meet interest payments due this month.

Blue Skyview Company Ltd, a financing unit of Hong Kong Airlines, on Thursday said it would be able to meet, on time, the next interest payment on 7.125 percent perpetual bonds, due on Jan. 26.

The bonds, with $683 million outstanding according to Refinitiv Eikon, were bid at 76 on Friday, up from 69.875 on Thursday, Tradeweb data showed. Bonds are typically issued at or near par value of 100 cents in the dollar.

The confirmation comes as Hong Kong Airlines has faced down several reports of financial difficulty. In Thursday’s statement, Blue Skyview said its board noted market rumours and some media reports about the “financial liquidity” of Hong Kong Airlines and its “ability to meet the relevant obligations under the perpetual securities”.

“After making reasonable enquiries, Hong Kong Airlines would like to clarify that the market rumours are without basis, malicious and misleading,” Blue Skyview said.

Hong Kong Airlines, which flies to more than 30 destinations in Asia and North America, is part of Hainan Airlines Holding Co Ltd, China’s fourth-largest carrier and part of HNA Group.

The group, whose assets include the largest single stake in Deutsche Bank AG, began streamlining in 2017. It is in the process of selling a series of assets acquired during a $50 billion global deal spree after China’s government increased scrutiny of aggressive overseas deal-making.

Last week Blue Cross Asia-Pacific Insurance Ltd, a Hong Kong insurance provider, told its agents that it would stop offering cover against the possibility of Hong Kong Airlines folding.

Reporting by Sumeet Chatterjee; Additional reporting by Alun John; Editing by Christopher Cushing

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