(April 10): Hainan Airlines Holding Co is looking to return to the bond market after going through a debt restructuring more than four years ago, according to people familiar with the matter.
The airline, formerly a prized asset of defunct conglomerate HNA Group Co, is seeking to raise as much as 500 million yuan through the potential onshore offering, said the people, who asked not to be identified as the matter is private.
Company representatives started approaching investors in recent weeks to gauge interest in a possible sale of five-year notes, the people said. The potential offering has been in the planning stages for at least a year, they added.
The bond sale would be a test of whether Chinese investors have an appetite for debt issued by distressed companies that have emerged from restructurings. It could serve as a useful reference point for other such firms considering returning to the domestic bond market.
“The airline today is fundamentally different from what it used to be, in terms of both ownership and operations,” said Xu Liqiang, portfolio manager at Shanghai Silver Leaf Investment Co.
Hainan Airlines didn’t immediately reply to a request for comment.
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Hainan Airlines got creditors’ approval for its debt restructuring in 2021, after it proposed paying the first 100,000 yuan of each bondholder’s claims, among other things. It has been controlled by Liaoning Fangda Group Industrial Co since then.
The restructuring followed HNA’s collapse after years of expansion fuelled by excessive borrowings in the early 2010s, when it spent more than US$40 billion acquiring luxury properties and stakes in firms including Deutsche Bank AG and Hilton Worldwide Holdings Inc.
Efforts to offload assets and refocus on aviation failed to salvage the company, particularly as Covid wreaked havoc on airlines, hastening the conglomerate’s demise.
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Hainan Airlines has been rebuilding its business since the restructuring and as of last year operated over 1,400 routes worldwide along with its subsidiaries, according to its website.
“As the aviation sector gradually recovers alongside the broader economy, a return to capital markets financing also appears to be a natural next step,” said Yao Yu, founder of credit research firm RatingDog.
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