China’s Dalian Wanda repays some holders of $520 million bond -sources

(Reuters) – Dalian Wanda Commercial Management, a unit of China’s largest commercial real estate developer Dalian Wanda Group, has made principal and interest payments to some holders of a $520 million bond, two bondholders said on Saturday.

After major developer Country Garden averted default on a dollar bond on Tuesday, the news of Wanda’s repayment could offer another glimmer of hope in a crisis in China’s massive property sector, which is weighing on the world’s second-biggest economy.

Holders of almost all of the 3.8 billion yuan ($520 million) note with a 2025 maturity exercised an option to demand repayment of the principal by Monday, Wanda has said.

China’s authorities in recent weeks have rolled out a series of measures, such as easing borrowing rules, to support the debt-riddled property sector, which previously accounted for one-quarter of China’s economic activity, but analysts say the steps are unlikely to reverse the slide.

The Wanda payment, first reported by Bloomberg, and Country Garden’s payment within the grace period on its bond, provide a respite, but China’s heavily indebted developers remain under strain.

Wanda, which in June stalled on a $22 million-dollar bond coupon payment before ultimately paying within the grace period, has been facing litigation and asset freeze orders from courts in China due to payment disputes.

The company did not immediately respond to a request for comment.

In July, major credit ratings agencies downgraded the Wanda unit, warning of “non-payment risk” ahead of the repayment of a $400 million bond due then. It raised $320 million through the partial sale of its entertainment unit Beijing Wanda Cultural Industry to pay it off.

($1 = 7.3430 Chinese yuan renminbi)

(Reporting by Kevin Huang and Kevin Yao in Beijing, and Kanjyik Ghosh in Bengaluru; Editing by Stephen Coates and William Mallard)