SOVEREIGN DEBT RESTRUCTURING | MASTERCLASS

A deep dive masterclass on sovereign debt restructuring, to be conducted virtually by Asian high yield bond expert Florian Schmidt.

30 June 2022 (Thu), 5pm Singapore/HK time

In the latest update, Huarong is set to receive CNY 50bn ($7.7bn) in fresh capital from state-owned conglomerate Citic Group as part of its recapitalization, as per Bloomberg sources. While details are yet to be finalized, the plan could change, they said. Existing Huarong shareholders will likely see the value of their stakes plunge as the company recognizes losses on non- performing assets, two sources familiar with the overhaul plan said. For bondholders, the capital injection would help shore up Huarong’s balance sheet but the stake transfer to Citic would leave Huarong a step away from government control, and could unnerve some creditors, Bloomberg notes. This comes just days after reports came out that Citic wasaid to take control of the distressed asset manager after securing State Council approval for a restructuring plan. The rumors led to a rally in Huarong’s dollar bonds this week.

Separately, at an EGM held in Beijing, Huarong’s shareholders approved the appointment of Liang Qiang as President and proposals to exit non-core units. The state-owned asset manager has been under distress since end-March after it failed to publish its financials for 2020. In the exchange filing, Huarong stated that shareholders also passed resolutions “including a remuneration settlement plan for directors and supervisors for 2019, fixed assets budget for 2021, and the change in use of remaining proceeds from its 2015 initial public offering,” as per Bloomberg. The exchange filing however did not mention any details on its impending restructuring and financial results, which have rattled investors for a few months now.

Huarong’s 5% 2025s are up ~5 points to 83.25 and its 4.25% perps callable in 2025 up over 4 points to 60.17.

Show Buttons
Hide Buttons