Quick Take: Sunac to Issue $1 Billion in Bonds to Roll Over Debts

Sunac China Holdings Ltd., which has agreed to acquire Dalian Wanda’s theme parks for $6.52 billion, plans to roll over some of its existing debt by issuing $1 billion in new bonds.
The real estate developer plans to issue $400 million worth of three-year senior notes due in 2020 and $600 million in five-year senior notes due in 2022, the company said in a statement. Both dollar-denominated bonds will be listed on the Singapore Stock Exchange.
Senior notes are securities that — in the case of bankruptcy — are given higher priority for repayment over other kinds of debt.
Sunac added that the bonds aim “to optimize the debt structure” and “support the healthier and sustainable development of the company.”
It is not known if the proceeds will be used to roll over around $400 million in Singapore-listed Sunac bonds that will mature on October 17.
Sunac’s recent acquisition spree has sparked concern among credit ratings agencies. Before it bought Wanda’s theme park business, Sunac acquired a stake in cash-strapped LeEco for $2.2 billion in March. Before those deals, Sunac’s debt-to-assets ratio was already high — 87.9% as of the end of 2016.
Moody’s Investors Service assigned the two bonds a B3 rating on Wednesday, citing their limited material impact on Sunac’s overall leverage. On the same day, S&P Ratings Services gave the bonds a B rating. S&P pointed out that Sunac had spent 120 billion yuan ($17.85 billion) on distressed properties and merger deal since the beginning of 2017, more than its revenue from home sales during the first six months of the year.
On Thursday, Hong Kong-listed shares of Sunac retreated 2.82% to end at HK$18.58 ($2.38).
Contact reporter Leng Cheng (chengleng@caixin.com)

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