Fitch downgrades Wanda Commercial to junk on offshore funding concerns (updated)

Wanda Hotel Development

04/01/2018 02:45

(Adds rating was downgraded from investment grade to junk) 
    HONG KONG, Jan 3 (Reuters) - Fitch Ratings on Wednesday 
downgraded Dalian Wanda Commercial Property Co Ltd by two 
notches to a junk rating, citing the company's inability to 
access offshore funding channels to boost its liquidity in a 
timely manner.     
    The rating agency downgraded Wanda Commercial to 'BB+' from 
investment grade 'BBB', the second downgrade since 2016. Fitch 
also maintained its 'Rating Watch Negative' to reflect the 
continued lack of definitive funding channels to boost Wanda's 
offshore liquidity. 
    Chinese conglomerate Dalian Wanda Group, parent of Wanda 
Commercial and owned by one of China's richest men, Wang 
Jianlin, has invested heavily in entertainment and sports assets 
over the last few years. This has drawn the attention of Chinese 
regulators looking to stem perceived risky spending overseas. 
    "Wanda's liquidity position may come under substantial 
pressure if its offshore syndicated loan lenders demand for 
early repayment and Wanda fails to meet these demands promptly; 
or it fails to raise sufficient offshore liquidity to repay the 
$510 million second tranche of its offshore syndicated loan due 
in March 2018," Fitch said in a statement.  
    Wanda failed to issue offshore senior notes by the end of 
2017 despite gaining the National Development and Reform 
Commission's (NDRC) approval for $1.5 billion in issuance quota, 
and it's still uncertain when State Administration of Foreign 
Exchange (SAFE) will approve Wanda to remit onshore fund 
offshore, it added.   
    "This could trigger the cross-default clauses for the $1.2 
billion in senior notes, and add to repayment pressure." 
    Rating agencies S&P and Moody's last year downgraded Wanda 
Commercial to below investment grade.  
    Dalian Wanda Group last month said its 2017 revenues 
surpassed 200 billion yuan ($30.25 billion) and it had an equal 
amount in cash, responding to a local online media report that 
questioned the group's financial health.  urn:newsml:reuters.com:*:nL4N1OE3C4     
     
 
 (Reporting by Clare Jim; Editing by Vyas Mohan and Stephen 
Coates) 
 ((clare.jim@thomsonreuters.com; +852 2912 6653; Reuters 
Messaging: clare.jim.thomsonreuters.com@reuters.net)) 
 
Keywords: DALIAN WANDA FITCH/DOWNGRADE