Moody's downgrades Dalian Wanda

Moody's Investors Service said it downgraded Dalian Wanda Commercial Management Group Co., Ltd.'s (DWCM) corporate family rating to Ba2 from Ba1. The agency also lowered Wanda Commercial Properties (HK) Co. Ltd.'s (Wanda HK) CFR to B1 from Ba3 and the senior unsecured ratings on the bonds issued by Wanda Properties Global Co. Ltd., Wanda Properties Overseas Ltd. and Wanda Properties International Co. Ltd. to B1 from Ba3.

Wanda Properties Global, Wanda Properties Overseas and Wanda Properties International are wholly owned subsidiaries of Wanda HK. The rated bonds are guaranteed by Wanda HK and supported by deeds of equity interest purchase undertakings and keepwell deeds between DWCM, Wanda HK and the bond trustee.

The agency said all the ratings are on review for further downgrade. The outlook was stable before the review.

"The downgrade reflects our concerns over DWCM's increased liquidity and governance risks in view of its reduced liquidity buffer and weakened funding access, as well as increased related-party transactions with its largest shareholder, Dalian Wanda Group Co., Ltd. The sizable amount of a repurchase obligation for the pre-IPO capital of its property management subsidiary will add liquidity pressure to the company if the property management subsidiary cannot be listed by the end of 2023," said Alfred Hui, a Moody's analyst, in a press release.

"The review for downgrade reflects the uncertainty over DWCM's ability to recover its access to funding and financial impacts arising from the company's contagion risk exposure to Dalian Wanda Group," Hui added.

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