TheChek News Flow

The owner of the Westfield chain issued new bonds cheaply, but still needs to sort out its $35 billion debt load

Trans-Atlantic mall giant Unibail-Rodamco-Westfield URW +1.79% has pulled back from the brink. Finding a lasting fix for its debt problem will be more challenging.

Late Wednesday, Europe’s largest listed-property company by assets said it had issued bonds worth €2 billion, equivalent to $2.4 billion: one with a six-year maturity and coupon of 0.625% and an 11-year bond at 1.375%. Half of the cash will be used to refinance existing debt. The size and low cost of the issue is a win for activist investors who have been pushing for a new approach.

Along with French telecoms billionaire Xavier Niel, Unibail’s former chief executive Léon Bressler successfully persuaded investors to vote against a controversial €3.5 billion equity raise two weeks ago. Back then, Unibail’s chairman and chief executive warned that unless shareholders stumped up, the company could lose access to bond markets. Both men have since been ousted, with Mr. Bressler taking over as chairman.

News that a Covid-19 vaccine will soon be available helped the activists’ case. The yield on Unibail’s outstanding bonds has increased slightly since investors voted against the capital raise, but remains much lower than during the March selloff.

The new debt will come on top of net borrowings already equivalent to 12 times the earnings before interest, taxes, depreciation and amortization Unibail generated last year. To get that number down, the activists want Unibail to sell underperforming Westfield malls in the U.S. But with the rise of e-commerce weighing on the value of stores, it may be hard to find buyers at an acceptable price.

The company may still raise equity. Unibail’s shares have rallied 85% since Pfizer said its vaccine is effective. Under the old management’s plan to raise €3.5 billion, shareholders would have been diluted by 37%, according to UBS. At today’s higher share price, that dilution falls to 28%. Unibail needs to keep bond markets sweet: Any increase in the cost of debt would make it harder to refinance its €29 billion of total borrowings.

Mr. Bressler has been correct so far, but more difficult decisions are still to come.

Communist party newspaper tries to undermine belief virus jumped to humans within the country

Chinese state media are marshalling fringe theories to argue that the coronavirus pandemic began outside China, ahead of a World Health Organization investigation into the origins of the virus.

People’s Daily, the official Chinese Communist party newspaper, said in a Facebook post on Wednesday that “all available evidence” suggested the virus “did not start in central China’s Wuhan”, citing Chinese experts.

The post follows a series of statements from Chinese officials and scientists that have sought to cast doubt on the belief that Sars-Cov-2, the virus that causes Covid-19, first made the jump to humans within China.

One idea being promoted is that the virus was brought to Wuhan by frozen foods or their packaging and its spread was merely amplified in a local market.

“If we think back to the early outbreak in Wuhan at the start of the year, the patients from Huanan seafood market were concentrated in the frozen seafood section,” Wu Zunyou, a leading epidemiologist at China’s Centre for Disease Control, told Beijing News this month.

“These clues all point to imported cold chain seafood being the outbreak’s origin.”

China has been an outlier in claiming that frozen foods and their packaging represent a serious threat in seeding outbreaks of Covid-19.

Scientists have found some evidence that the virus can remain active in cold environments for long periods of time, but experts outside of China agree overwhelmingly that cold chain transportation represents a negligible risk of causing infections.

It is widely believed that Sars-Cov-2 originated in horseshoe bats after scientists identified a strain of the virus that is a close genetic match to the one found in humans. But how and where it made the jump to humans remains a mystery.

“Everything is still very fuzzy, very unclear,” said Yanzhong Huang, a senior fellow for public health at the Council for Foreign Relations in New York. 

China maintains that it is open to an investigation into the origins of the virus. However, the first team sent by the World Health Organization to establish guidelines for later studies failed to visit Wuhan, drawing criticism from US diplomats.

The plan adopted by the WHO’s investigation into the origins appears to be in line with China’s official position that the source could well be outside Wuhan, he said. Details of the global study were released this month. 

On Monday, Michael Ryan, the WHO Health Emergencies Programme executive director, said that the team should start the search in Wuhan and follow the evidence from there.

“While there was most certainly a temporal and geographic cluster associated with the market, not all cases in that initial cluster can be linked directly to the market,” he said.

The remarks were widely circulated in Chinese media, often omitting his assertion that the probe needed to focus first on Wuhan. 

China’s efforts to suggest that the virus originated outside the country threaten to worsen already frayed ties with the US in the final weeks of Donald Trump’s presidency. Mr Trump has been a frequent critic of the WHO, which he accuses of being too deferential to China.

Mr Huang fears that there could be further politicisation of the process that will make it harder for “an independent, transparent and thorough investigation with results that can be accepted by all involved parties”.

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