(Yicai Global) July 18 -- The price of several of Dalian Wanda Commercial Properties Co.'s [HKG:3699] bonds fell sharply yesterday. Standard and Poor's Financial Services LLC issued a statement saying that it will add Wanda Commercial Properties to its negative watch list.
The 15 Wanda 01 Bond reportedly closed at USD14.34 (CNY97) yesterday, down 1.22 percent. The 16 Wanda 02 Bond dropped 1.36 percent to CNY95.11. Wanda Cinema Line Corp. [SHE:002739] was not immediately affected as trading of its shares was suspended.
S&P announced yesterday that it will place Wanda Commercial Properties on negative watch. The rapid and high-volume trading between Wanda and Sunac China Holdings [HKG:01918] has damaged the stability and transparency of Wanda beyond expectation, the credit rating agency said. Wanda's information disclosure mechanisms are inferior to other companies with the same rating. Wanda Commercial Properties' contract sales and income will likely decline, and this deterioration will counteract the benefits of its decreased debt, S&P said.
On July 10, Sunac signed a framework agreement with Dalian Wanda Commercial Properties, a unit of Dalian Wanda Group, under which Sunac will acquire 91 percent equity in 13 cultural and tourism project companies and 100 percent equity in 76 hotels for CNY63.17 billion.
The two other Big Three credit rating agencies, Fitch Ratings Inc. and Moody's Investors Service, offered their own takes on the deal. Fitch viewed the agreement as beneficial to Wanda Group's credit rating.
The sale plan will be a key step for Wanda Commercial Properties in fulfilling its asset-light strategies if it succeeds, Moody's report said. This will improve the enterprise's liquidity and reduce its debts, Moody's said.
Wanda Commercial Properties bonds, worth as much as CNY87 billion, account for the majority of Wanda Group's bonds, per information compiled by Yicai Global. Wanda Commercial Properties has replaced short-term loans with bonds since last year, and long-term loans are still one of its major debt sources.
Wanda Commercial Properties' asset-liability ratio was 70.61 percent by the end of the first quarter. Its long-term loan balance was CNY138.8 billion. Wanda Group's debt from bonds total CNY10.6 billion, data from market research firm Wind Information show. Wanda Group has USD1.41 billion in foreign payables, per Haitong Securities information.