China Firm Pays More to Borrow Than Defaulted Argentina

Bloomberg’s Lianting Tu explains why HNA may be ready to hit the debt market.

When China sold its first sovereign dollar bond since 2004 last month, it was supposed to help its companies borrow more cheaply.

That’s not how it’s working out for HNA Group Co. One of the country’s top conglomerates, HNA is paying the price for being scrutinized by Chinese regulators after it helped spearhead a record amount of overseas acquisitions.

HNA is marketing a 9 percent interest rate on a dollar note that matures in just 363 days. For perspective, that’s more than a percentage point higher than what it cost serial defaulter Argentina to borrow. Argentina sold its century bond at a yield of 7.917 percent rate back in June. For HNA, even 9 percent might not be enough for some.

"Given the recent headline risk of the group, some may pass on the deal regardless," said Annisa Lee, head of Asia ex-Japan flow credit analysis at Nomura International (Hong Kong) Ltd. "They’re paying a high yield to attract high-risk-appetite investors," she said.

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