Sunac shares plunge as banks review Wanda loans

SHANGHAI: Sunac China Holdings Ltd shares and bonds plunged after a local media report that domestic banks are reviewing its credit risk following a deal to buy assets from Dalian Wanda Group Co, a firm that has attracted scrutiny from China’s leaders for its prolific deal binge.

The shares fell as much as 13%, the biggest intraday decline since July 2015. The developer’s 2019 US dollar bonds were set for the largest decline on record, falling 4.9 cents to 98.5 cents on the dollar as of 3:23 pm Hong Kong time, according to Bloomberg-compiled prices.

China Construction Bank Corp halted the sale of a Sunac product following a notice instructing the bank to review risks associated with lending to the company, Jiemian reported earlier, citing an unidentified person at the lender. The notice also mentioned Wanda, Fosun International Ltd and HNA Group Co.

Sunac chairman Sun Hongbin said it was “normal” for banks to review the firm’s credit risks after the Wanda deal, QQ.com reported, citing an interview. A Sunac representative declined to immediately comment to Bloomberg.

Sunac, which last week said it would buy hotels and theme parks from Wanda for more than US$9bil in China’s largest ever property transaction, is the latest company to face the fallout from heightened scrutiny from the nation’s leaders ahead of a Communist Party reshuffle later this year. China plans to cut off some funding for billionaire Wang Jianlin’s Wanda after deciding the conglomerate breached restrictions for overseas investments, said people familiar with the decision.

Sunac’s acquisition from Wanda is billionaire Hongbin’s biggest gambit in a spree that also included spending US$2.2bil on the shares of firms in the cash-strapped LeEco group, including Leshi Internet Information & Technology Corp. — Bloomberg