China Vanke bonds rose on Monday after the state-backed developer said it would repay its 2027 bonds worth 1 billion yuan ($137.68 million) in early March.
Vanke’s announcement boosted investor confidence over its ability to repay short-term financial debt, including a 3 billion yuan onshore bond due Monday. Unlike the redemption of the 2027 bonds, the company is not required to communicate about Monday’s redemption.
Concerns over Vanke’s liquidity have intensified this month as the company faces several looming deadlines. In total, $3.4 billion is owed this year.
Earlier this month, a state media report claimed that the developer’s CEO had been detained and that the company could face a takeover or reorganization. The report was deleted hours after its publication.
In a filing Friday, Vanke said it would exercise its rights to redeem the 2027 callable bond in March.
Analysts said investors viewed the early repayment as a sign that the company would have no problem meeting its more immediate obligations.
“The announcement of the repayment of the last bond of the first quarter is equivalent to declaring that all bonds of the quarter are free from default problems,” said Yao Yu, founder of credit analysis company Ratingdog.
Vanke’s May 2028 onshore bond was trading 15% higher on Monday morning at 73 yuan against a face value of 100 yuan.
-Bids for its May 2025 dollar bond also rose to 80.608 cents on the dollar, up from around 75.7 cents on Friday.
Some analysts say a default is inevitable this year in the absence of new cash, as Vanke’s monthly sales fall below the break-even point and the company finds it difficult to borrow from banks and sell off assets. assets. Vanke fell from second place in 2023 to fifth place in terms of sales value last year.
The government of the southern city of Shenzhen, where Vanke is headquartered, is stepping up meetings and coordination with local state-owned enterprises on plans to limit the company’s debt risk and on asset sales, Reuters reported last week.
The developer has been trying to sell a number of assets, including its stakes in logistics platform GLP and property management unit Onewo, to reduce liquidity pressure, sources said.
It is in advanced talks to sell a majority stake in VX Logistics to Singapore sovereign wealth fund GIC, and a deal could be finalized as soon as next month, a source told Reuters last week.
All three global rating agencies downgraded the developer to junk status this month, citing erosion of its financial flexibility and uncertain 2025 sales prospects.
($1 = 7.2634 Chinese yuan renminbi)
