By Tom Westbrook
SYDNEY (Reuters) – Debts linked to China’s biggest commercial property firm Dalian Wanda Group took a further beating on Thursday as payment worries intensified and S&P Global cut its rating on Wanda’s services arm bonds for the second time this week.
S&P said “non-payment risk” had risen as Dalian Wanda Commercial Management Group races for cash to repay $400 million due on Sunday and a $22 million interest payment due on July 20, with a 10-day grace period.
It said asset sales at parent Dalian Wanda were so far insufficient to support Wanda Commercial. Dalian Wanda Group declined to comment.
“Based on our understanding, the company currently only has about $200 million in accessible offshore cash,” the ratings agency said of Wanda Commercial, with further funds already pledged against onshore borrowing.
“Given the tight timeline,” it said “execution risk” was high and lowered its rating on the company’s debts to “speculative grade” CCC.
S&P Global had already cut its rating on Wanda Commercial from “B+” to “BB-” on Monday, when the company’s bonds suffered a record hammering.
Prices for its $600 million dollar bond maturing in January dived 15.5 cents to 29.75 cents, less than a third of face value.
Wanda Commercial’s 2025 and 2026 maturing bonds steadied around that level.
Other high-yield China property names also suffered sell-offs this week as more negative news emerged, with the sector’s debt crisis showing few signs of stabilising despite policy support.
China’s property developers have been battered over the last few years as a government crackdown on high leverage levels led to a rash of debt defaults and uncompleted housing projects.
The sector was once a key economic growth driver, contributing around a quarter of the country’s gross domestic product.
June data on Monday showed the largest monthly slump in property sales this year and with fresh defaults – even at state-backed builders – more pressure is building on the sector.
The trustee for a state-backed developer Greenland Holdings’ dollar bond said last week the developer has defaulted on the notes worth $432 million, while Sino-Ocean Group proposed this week to extend the repayment for a 2 billion yuan onshore bond due Aug.2.
China Evergrande Group, the world’s most indebted property developer, on Monday posted a combined loss of $81 billion in 2021 and 2022 and a rise in total liabilities in its long overdue results.
(Reporting by Tom Westbrook; Additional reporting by Clare Jim in Hong Kong; Editing by Sonali Paul and Kim Coghill)
