China’s Hunan Trust reported that HNA Innovation failed to repay RMB300m in debt due 10th of September. This another failed payment from the highly indebted conglomerate HNA Group. Things seem to have become even worse for the group. FT points HNA’s problems;
The company is already under strict supervision by a group of bank creditors, led by China Development Bank, following a liquidity crunch in the final quarter of last year. The default comes despite an estimated $18bn in asset sales by HNA this year that have done little to address its ability to meet its domestic debts. Last month, HNA began missing payments to individual investors in peer-to-peer products it issued, while narrowly averting a default on a Rmb1bn bond.
Hunan Trust, issued a statement saying that it would seek to freeze HNA’s assets. Now investors are looking to the P2P debt HNA raised if they can repay the debt.
As previously noted here on AskBrokers, Beijing’s clampdown on P2P lenders and other parts of the shadow banking system is having effect on consumption and the Chinese economy, HNA’s default shows that the reverberations are spreading throughout the system hitting highly indebted institutions.
HNA Group is trying shed it of any assets it can as it aims to save the company. Yesterday WSJ reported that several different parties are looking to buy HNA’s 7.6% in Deutsche Bank (DB US).
HNA, which is one of Deutsche Bank’s largest shareholders, is planning to unload its entire 7.6% stake in the German bank as part of a plan to shrink its global footprint, the Journal previously reported.
The potential buyers that were recently in contact with HNA include state-backed fund China Investment Corp., as well as Chinese state-owned financial institutions Citic Group, China Merchants Group and China Everbright Group, the people said. Some European and U.S. investors have also inquired about HNA’s stake in Deutsche Bank.
HNA Group could be one of many companies and entities that are and will face additional troubles if Beijing’s clampdown continues. This could potentially further impact the economy and Chinese markets.