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China Vanke's bonds extended losses this week after the developer requested bondholder approval to delay repayment of a 2 billion yuan (USD 282.6 million) onshore bond due in mid-December, marking its first such request. Several yuan bonds fell over 20%, some close to 40%, prompting trading suspensions in six exchange-traded bonds. Offshore dollar bonds also declined sharply. The move has heightened concerns about Beijing's support for the sector. With 364.3 billion yuan in debt, potential restructuring could be more significant than defaults by Evergrande or Country Garden.
China Vanke's bonds continued to fall this week after the state-backed property developer moved to postpone an onshore bond repayment for the first time. Several of the company's yuan-denominated bonds dropped sharply, with some declining more than 20% and certain issues losing around 40%. This prompted the Shenzhen Stock Exchange to halt trading in six of Vanke's exchange-traded bonds during early trading hours. Advertisement
The company's yuan bond maturing in March 2027 was trading at 50 per 100 par value, down nearly 30% and marking a more than 40% decline over the week. Vanke disclosed in a filing late on Wednesday that it is seeking bondholder approval to delay repayment of a 2 billion yuan (USD 282.6 million) onshore bond due mid-December.
This move represents the first onshore bond extension request by Vanke, surprising market participants and raising concerns about Beijing's willingness to further support the struggling property sector. Offshore, Vanke's dollar bonds were trading at 30.4 cents on the dollar, falling from around 40 cents earlier, and down from roughly 55.4 cents earlier in the week.
The developer's bond decline accelerated after reports suggested that the Shenzhen government had received preliminary guidance from Beijing to consider a 'market-oriented approach' toward Vanke's debt, a term indicating possible restructuring. With 364.3 billion yuan in interest-bearing liabilities, any debt restructuring at Vanke could surpass the scale of defaults experienced by privately-owned developers such as Evergrande and Country Garden in recent years.
Two sources familiar with the matter informed Reuters that China International Capital Corporation (CICC), a state-owned investment bank, has been engaged to review Vanke's debt. A restructuring plan is reportedly included among the options in an internal report prepared for the central government.
Source Reuters
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