What a close shave to Dalian Wanda.

It is an important lesson for companies to learn not to take excessive debt for expansion, and practice risk control at all times. However, the bond price of Dalian Wanda is telling another story.

Dalian Wanda Group Co. is facing a double whammy this year: a wall of maturing debt and a deadly virus that has hampered its operations.

Dalian Wanda Commercial Management Group Co. had a total debt of 333 billion yuan as of Sept. 30, more than twice its liquid assets. The company has borrowed billions of dollars to fund its acquisition spree, ranging from Hollywood studios, hotels, Manhattan buildings to European football clubs.

Due to the virus outbreak, the company has shut down malls, theme parks, and cinemas to comply with epidemic-control measures, and is waiving or delaying rents for tenants. Worse still, the company needs to refinance or pay about 39.8 billion yuan of its bonds this year.

Buying spree was also seen in other Chinese companies such as HNA, Anbang a few years back. The timing couldn't be worse for them. The deadly virus has left them to go bare without a financial cushion. It is an important lesson for companies to learn not to take excessive debt for expansion, and practice risk control at all times.

However, the US 10 year Treasury Bond has surge below 0.7% for the first time in history, giving Dalian Wanda a chance to refinance its debt in a lower interest rate environment when every investor is fleeing to safety assets at this juncture.

What a close shave to Dalian Wanda.

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