'Default Concerns' Wanda Quickly Extinguished Fire... "Raising Funds for Bond Repayment"

China's largest real estate developer Wanda announced that it has successfully raised funds to repay a large amount of dollar-denominated bonds. Following Evergrande Group, which had raised concerns about default, Wanda has managed to put out the urgent fire, but due to the real estate market downturn, it is expected that the financial situation will not improve in the short term.

According to local media including China Daily Economic News on the 23rd, Wanda Group sold a 49% stake in its affiliate Beijing Wanda Investment to the content production company Shanghai Rui. The sale amounted to 2.262 billion yuan (approximately 405 billion KRW), and Wanda stated that the funds raised will be used to repay the principal of the dollar bonds.

The actual sale took place on the 20th. After the sale, the shares of Beijing Wanda Investment are held by Beijing Wanda Cultural Industry Group at 49.8%, Shanghai Rui at 49%, and Wang Jianlin, chairman of Wanda Group, at 1.2%.

[Image source=Reuters Yonhap News]

Earlier, Dalian Wanda Commercial Management Group, an affiliate responsible for Wanda Group's real estate management sector, announced on the 23rd that it was short of 200 million dollars (approximately 514 billion KRW) out of the 400 million dollars principal and interest bonds maturing on that day. This company was also rumored to be in default in July last year but reportedly overcame the crisis by issuing bonds.

Through this equity sale, Wanda Group has been able to put out the urgent fire. However, the Chinese real estate market still shows sluggish trends, and the overall economic recovery is slow, making it difficult for the financial condition to improve in the short term.

According to Bloomberg's tally, Wanda Group and its affiliates have debts of at least 1.18 billion dollars to repay by the end of this year. Credit rating agency Standard & Poor's (S&P) downgraded the long-term bonds of Dalian Wanda Commercial Management Group from BB to B+ due to liquidity issues and business uncertainties.

Previously, Evergrande Group, which had raised concerns about the Chinese real estate market due to its default crisis in 2021, revealed that it reported a deficit of 589.1 billion yuan over two years from 2021 to 2022. Evergrande recorded losses for two consecutive years for the first time since its listing on the Hong Kong Stock Exchange in 2009. This was evaluated as a result of the real estate market downturn caused by the COVID-19 impact and the Chinese government's real estate regulations such as loan restrictions on real estate developers.

Meanwhile, on the 21st, Li Chang, Premier of the State Council of China, announced that the government will strengthen support for real estate construction to promote innovation in urban villages. He emphasized that more private capital will be secured to expand domestic demand and promote urban development. This policy came as the Chinese second-quarter gross domestic product (GDP) growth rate reached only 6.3%, falling short of market expectations, prompting authorities to devise various measures to revive the economy.

This content was produced with the assistance of AI translation services.