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SHANGHAI, May 20 (Reuters) - An offshore arm of Chinese bad debt giant China Huarong Asset Management Co Ltd repaid a maturing dollar bond on time on Thursday, after concerns over its ability to service debts prompted a sell-off of its bonds last month.
The repayment of principal and interest on a maturing $300 million 3.3% bond by China Huarong International Holdings Ltd, announced on its parent’s official WeChat account, had been widely expected.
But doubts about the parent firm’s financial situation and its ongoing restructuring plans continue to nag investors, who are concerned about potential losses and what they would mean for assumptions of government backing of major Chinese state-owned enterprises.
Huarong Securities Co Ltd, an onshore subsidiary of China Huarong Asset Management, said in a statement on Wednesday that its operations were normal and it had ample funds to repay interest and principal on its outstanding bonds, after its 2 billion yuan ($310.57 million) 4.65% October 2023 exchange-traded bond exhibited “unusual fluctuations” in its price in the past week.
Investors dumped Huarong’s dollar bonds in April amid uncertainty about its ability to repay them after the company delayed the release of its annual results at the end of March, citing the need to finalise a “relevant transaction”.
The company has faced downgrades of its local and foreign currency issuer ratings by global rating agencies but has said it continues to operate normally with sufficient liquidity.
Huarong faces its next offshore maturity on June 3, when a $900 million 3.25% dollar bond issued by Huarong Finance II Co Ltd, a subsidiary of China Huarong International Holdings, comes due.
In its statement on Thursday, Huarong said it had “made appropriate arrangements” and preparations for the repayment of bonds coming due. ($1 = 6.4398 Chinese yuan) (Reporting by Andrew Galbraith; Editing by Alex Richardson and Kim Coghill)