Bohai Leasing's Debt Refinancing and Strategic Asset Sales: Navigating Distressed Aviation and Container Leasing Markets

In the shadow of HNA Group's collapse, Bohai Leasing Co. Ltd. has emerged as a case study in corporate resurrection. The Shenzhen-listed firm's recent $1.75 billion sale of its container leasing subsidiary, Seaco, to Textainer Group (a Stonepeak Capital portfolio company), marks a pivotal shift in its strategy to deleverage and refocus on its core aviation leasing business. This move, coupled with aggressive private credit financing and asset sales, reflects broader trends in leveraged alternative asset markets—and offers critical lessons for investors navigating the risks and opportunities in distressed aviation and container leasing sectors.

The Debt Restructuring Playbook: From Distress to Stability

Bohai's journey began with a debt-to-asset ratio of 83% and cumulative losses exceeding $1.5 billion between 2020 and 2022. By 2024, its overdue debts had ballooned to 1.8 billion yuan, forcing the company to pivot from traditional refinancing to a hybrid strategy of asset sales and private credit. The Seaco deal, finalized in 2025, is a textbook example of strategic deleveraging. By offloading its 100% stake in Seaco—a global container leasing giant with 2.4 million TEU—Bohai injected $1.75 billion into its balance sheet, earmarked for repaying high-interest debt and stabilizing operations.

The sale also underscores a broader trend: the migration of capital from container leasing to aviation. While container leasing remains cyclical and sensitive to trade volatility, aviation leasing offers more predictable cash flows, particularly with narrowbody aircraft demand surging post-pandemic. Bohai's pivot aligns with industry shifts, as seen in Avolon's recent performance (a key Bohai affiliate) and the broader rebound in aircraft ABS markets.

Private Credit as a Lifeline: High-Yield, High-Risk

Bohai's refinancing strategy also highlights the growing role of private credit in distressed markets. In 2024, the company secured a $1 billion loan from RRJ Capital at 11.25% interest and a $1.1 billion bond issuance led by Morgan Stanley at 8.75%. These terms, while costly, reflect the flexibility of private credit in a tightening public debt market. Unlike traditional banks, private lenders like RRJ and Stonepeak can structure bespoke deals with tailored covenants, making them ideal partners for firms in urgent need of liquidity.

However, the risks are non-trivial. Private credit's higher yields come with elevated default risks, particularly in sectors like aviation and container leasing, where lessee defaults can cascade through structured credit vehicles. For instance, the recent struggles of airlines in emerging markets and the depreciation of container values have tested the resilience of asset-backed structures. Investors must scrutinize the quality of collateral and the strength of financial covenants in these deals.

Broader Market Trends: A Tale of Two Leasing Sectors

The aviation and container leasing markets are diverging in 2025. Aviation leasing, buoyed by falling interest rates and a rebound in air travel, has seen lease rates stabilize. KBRA's analysis notes that 20% of its rated structured finance transactions since 2022 are privately placed, reflecting the sector's reliance on non-traditional capital. Meanwhile, container leasing remains vulnerable to trade slowdowns and oversupply, with some leasing vehicles relying on overcollateralization to absorb losses.

Bohai's experience mirrors these dynamics. Its exit from Seaco aligns with the sector's challenges, while its focus on aviation leasing taps into a more resilient market. The company's success in securing private credit also highlights a macro trend: as public bond markets shrink and banks tighten lending, private credit is becoming the default option for distressed firms.

Investment Implications: Opportunities in Distress

For stakeholders, Bohai's restructuring offers a blueprint for navigating distressed assets. Key takeaways include:
1. Asset Sales as Liquidity Catalysts: Selling non-core assets (like Seaco) can unlock value and reduce leverage, particularly in sectors with weak demand.
2. Private Credit as a Double-Edged Sword: While it provides flexibility, investors must weigh high yields against the risk of covenant breaches and collateral depreciation.
3. Diversification is Key: Overexposure to a single sector (e.g., container leasing) or lessee (e.g., a single airline) amplifies risk. Bohai's pivot to aviation underscores the importance of diversification.

The Road Ahead: Caution and Opportunity

Bohai's journey is far from over. While the Seaco sale and private credit deals have stabilized its balance sheet, the company must now prove its ability to grow its aviation leasing business profitably. For investors, the key is to monitor its debt reduction progress, asset quality, and the performance of its core aviation portfolio.

In the broader market, the rise of private credit and the divergence between aviation and container leasing sectors present both risks and opportunities. Investors with the capacity to conduct deep credit analysis—and the patience to weather illiquidity—may find value in these markets. But as Bohai's story shows, success requires more than capital; it demands strategic clarity and the discipline to exit unviable assets.

In the end, Bohai Leasing's restructuring is a microcosm of a larger shift: the rise of private credit as a force in distressed markets. For those willing to navigate its complexities, the rewards could be substantial—but the path is fraught with pitfalls.