Suspension continues for HKA bond trading

Business | Avery Chen 10 Dec 2019

Trading in a perpetual bond issued by Hong Kong Airlines remained suspended, despite the carrier avoiding losing its license.

Blue Skyview Company, a financing unit of Hong Kong Airlines, said on Sunday night that it does not believe the financial condition of HK Airlines will affect its ability to honor its repayment obligations, as the US$683 million (HK$5.33 billion) worth of perpetual bond has no maturity date and will not be repayable unless the company requests redemption.

Blue Skyview issued the perpetual bond, with a coupon of 7.125 percent, in 2017, and has to pay interest of about HK$190 million each in January and July every year. The price of the bond slumped more than 8 percent to US$77 before trading was halted on December 3.

The Air Transport Licensing Authority last week had ordered HK Airlines to improve its financial position or risk losing its license. The aviation regulator said on Saturday that it will not take further action against the airline as it has raised its cash to the level stipulated by the authority and pledged that the level would be maintained.

That came after HNA Group, parent of HK airlines, received a 4 billion yuan (HK$4.44 billion) loan from eight state-owned banks led by China Development Bank.

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