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China Vanke, a leading state-backed property developer, has received bondholder approval to defer repayments on two yuan-denominated bonds that matured in December, postponing 60% of the principal by a year. The move, backed by Beijing and enhanced with upfront payments and collateral, provides temporary relief amid its USD 50 billion debt burden. Shenzhen Metro, its major shareholder, is extending additional loans to cover principal and interest. Despite these measures, analysts warn that Vanke faces upcoming bond deadlines in April and the broader property market challenges remain significant.
China Vanke has obtained consent from bondholders to delay part of the repayments on two yuan-denominated bonds, offering the troubled developer crucial breathing space as it continues negotiating other debt obligations with support from Beijing. The bonds, which matured in mid-December, are worth a total of 5.7 billion yuan (around USD 820 million). Under the new agreement, bondholders approved deferring 60% of the repayment by one year, while the remaining 40% is still payable as scheduled. Advertisement
Earlier this month, Vanke had submitted enhanced proposals for three other yuan bonds, offering to pay 40% of the principal upfront and providing additional collateral. These revised proposals, reportedly encouraged by government authorities, followed previous plans that had been firmly rejected by creditors. Last week, a similar deferral arrangement was approved for a 1.1 billion yuan (USD 160 million) bond, marking the first major concession from bondholders.
Vanke's debt challenges stem from the wider slowdown in China's property sector, where multiple developers have defaulted on obligations. With total debt reaching around USD 50 billion, Vanke's potential default could undermine buyer confidence and affect broader economic stability, especially amid slowing growth and weak consumer spending. Analysts note that these bond extensions provide temporary relief but do not resolve structural issues within the company or the sector.
To support repayment obligations, Shenzhen Metro, Vanke's largest shareholder and a municipal government-owned entity, will provide an additional loan of up to 2.36 billion yuan with an interest rate of 2.34% over 36 months. This complements earlier loans and helps cover principal and interest payments on the deferred bonds.
Vanke faces further maturities in April, with bonds worth 2 billion yuan scheduled to mature each month of the second quarter. Credit analysts suggest that without a recovery in housing sales, Vanke may need additional restructuring in the coming months. Beijing has introduced multiple measures to stabilize the property market, yet new home prices continued to fall in December, highlighting the sector's persistent weaknesses.
Source Reuters
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