Fitch downgrades China Vanke further on liquidity concerns
KUALA LUMPUR: Ratings agency Fitch on Wednesday downgraded ratings for Chinese property company China Vanke , citing liquidity concerns amidst an ailing property sector in the world's second largest economy.
Fitch downgraded long-term foreign- and local-currency issuer default ratings (IDRs) for the embattled property developer to 'CCC+' from 'B-'.
The agency also downgraded the long-term IDR for the company's unit, Vanke Real Estate (Hong Kong), to 'CCC' from 'CCC+', and its senior unsecured rating and the rating on its outstanding senior notes to 'CCC', from 'CCC+'.
The downgrade follows Vanke's weak first-quarter results with sales and cash flow generation failing to meet expectations, leading to a reduction in its liquidity buffer, Fitch said.
With significant debt maturing in 2025, sales decline will have a direct impact on the company's cash generation and debt-servicing capacity, Fitch said.
Earlier this year, several rating agencies including S&P Global and Moody's downgraded the property developer citing liquidity concerns.
Last month, China Vanke said it will receive US$454 million in loans from state-owned Shenzhen Metro Group (SZMG), its biggest shareholder, to repay its bonds.
"Ongoing and timely liquidity support from SZMG may be essential to address China Vanke's near-term financing requirement and support its ratings, considering the uncertainties surrounding the company's cash flow generation," Fitch said in a statement.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Star
37 minutes ago
- The Star
PETRONAS ramps up global LNG push to support China's energy transition
A Petronas staff member walks past the PETRONAS logo at the Petronas Twin Towers following the group's financial results announcement on March 13. — AZMAN GHANI/The Star PETRONAS, Malaysia's State-owned energy group, will accelerate the expansion of its global liquefied natural gas (LNG) portfolio to support China's growing energy needs, as the world's second-largest economy deepens efforts to shift toward cleaner fuels and strengthen energy security, said a senior executive. In 2024, PETRONAS exported 8 million metric tons of LNG to China, accounting for about 10 percent of the country's total LNG imports for the year, according to the Kuala Lumpur-headquartered company. In addition to ensuring long-term supply capability from its LNG complex by developing several new gas fields in Malaysia, including Timi, Kasawari and Jerun, PETRONAS will advance additional upstream projects such as the Rosmari and Marjoram fields, aimed at bolstering production capacity and meeting future demand, said Shamsairi Ibrahim, vice-president of PETRONAS' LNG marketing and trading, gas and maritime business. "Internationally, we are broadening our supply network, particularly in North America. A key milestone will be the first LNG cargo from our joint venture in Alberta-based LNG Canada, expected by mid-2025," said Ibrahim. Once operational, the project is expected to add 14 million metric tons per annum to PETRONAS' global LNG portfolio, significantly strengthening its export capacity and diversifying its supply base. To better serve Chinese clients and address global LNG demand in a more sustainable way, the company is also enhancing its delivery capabilities. This includes deploying three new LNG vessels to improve shipments to Shenergy Group's Wuhaogou terminal in Shanghai and to supply inland cities along the Yangtze River via creative pipeline systems. PETRONAS' efforts are further supported by its partnership with Tiger Gas, a Shanghai-based company with multiple investments in Malaysia, including LNG filling facilities in Bintulu. The collaboration enhances cross-border LNG infrastructure and reinforces shared commitments to clean energy development. One of the key outcomes of this collaboration is the development of a specially designed LNG vessel capable of carrying around 600 containers. Unlike conventional LNG carriers that require deep-water ports, this vessel can navigate directly into the Yangtze River, expanding LNG accessibility across China's non-coastal regions. Apart from LNG, the Malaysian energy group also supplies petrochemicals, crude oil and lubricants to the Chinese market. It is advancing marine LNG solutions such as bunkering services and expanding its LNG fleet with new LNG carriers. Four of these vessels are currently under construction at Hudong-Zhonghua Shipbuilding (Group) Co Ltd, a major shipyard based in Shanghai. Ibrahim noted that geopolitical uncertainties and rising energy security concerns have prompted many countries, including China, to prioritize domestic energy sources. This trend has introduced greater caution around long-term LNG contracts and tempered appetite for new import commitments, creating a more complex and unpredictable global LNG market. "Despite these challenges, PETRONAS remains confident in the value of its differentiated LNG and clean energy portfolio," he said, stressing that the company believes its continued commitment to providing reliable, sustainable energy solutions aligns well with China's long-term energy transition strategy. - China Daily/ANN
The Star
37 minutes ago
- The Star
Research houses maintain 4.0% GDP growth forecast for 2025
KUALA LUMPUR: CIMB Securities Sdn Bhd is maintaining its 2025 gross domestic product (GDP) forecast for Malaysia at 4.0 per cent and believes that Bank Negara Malaysia (BNM) may reduce the overnight policy rate (OPR) in the third quarter of 2025 (3Q 2025). In a note today, the firm said that even with near-term support from export front-loading, Malaysia's growth outlook remains clouded by persistent global trade uncertainties and uneven domestic recovery. "Capital goods imports surged by 37.7 per cent in the first four months of 2025 (4M 2025), but sustainability beyond the 90-day US tariff pause remains uncertain. "Domestically, private consumption moderated to 5.0 per cent in 1Q 2025 (4Q 2024: 5.3 per cent) despite fiscal support such as cash transfers and subsidies, while early signs of weakening emerged in financial services, information and communication technology, and automotive sales,' it said. For now, CIMB Securities is maintaining its 2025 GDP growth projection of 4.0 per cent, lower than the government's projection of 4.5-5.5 per cent. "Nonetheless, trade de-escalation and encouraging early-stage bilateral trade talks with the United States (US) may offer upside potential to the economic outlook. "A slower growth outlook and benign inflation (4M 2025: 1.5 per cent year-on-year) will allow BNM room to cut the OPR to 2.75 per cent in 3Q 2025,' it added. Hong Leong Investment Bank Bhd is also retaining its 2025 GDP growth forecast at 4.0 per cent. "As for Malaysia's negotiation with the US, with less than a month remaining in the 90-day negotiation window and no concrete bilateral agreements finalised, downside risks persist,' it said in a separate note. Nonetheless, recent progress in US-China trade talks held in London offers some optimism. "Officials agreed on a preliminary framework to implement the Geneva trade consensus, which indicates that the US administration may be exploring the possibility of a more favourable deal, rather than pursuing immediate economic decoupling. "However, the outlook remains uncertain, and any lasting improvement in trade relations will depend on the successful conclusion of ongoing negotiations,' it added. - Bernama
The Star
an hour ago
- The Star
Vietnam advances plans for international financial centre as trade risks grow
FILE PHOTO: A container ship sails past a luxury apartment complex in Ho Chi Minh City on December 3, 2021. The financial centre will operate in both financial hub Ho Chi Minh City and tourism-focused Danang.- AFP HANOI: Vietnam is moving forward with plans to establish an international financial centre to enhance its role in the global financial market and attract international capital flows, Finance Minister Nguyen Van Thang told parliament on Tuesday (June 10). The initiative could position Vietnam as a regional hub for financial activity, boosting its economic influence, according to Thang and a draft plan, now in its 30th version, seen by Reuters. The draft includes policies covering foreign exchange liberalisation, banking activities, capital market development, tax incentives and labour provisions targeting experts and investors. Foreign investment inflows into Vietnam in January-May rose 7.9 per cent to US$8.9 billion, the government said, while foreign investment pledges were up 51.1 per cent to US$18.4 billion. But the United States has threatened heavy tariffs on Vietnamese-made goods if it does not make major concessions, which could dampen its investment momentum. The country is an important manufacturing base for companies ranging from Samsung Electronics, Foxconn and Intel to Nike and Adidas. The National Assembly, Vietnamese parliament, will vote on the resolution on June 27. A key feature allows members of the financial centre to use foreign currency for transactions and secure international financing, according to the draft. "Members are permitted to establish trading floors and platforms for commodities, carbon credits, cultural products and innovative startups," the draft said. Two sources familiar with the matter confirmed the draft as the latest version. Administrative procedures will be simplified, the draft added, creating more favourable conditions for participants. The financial centre will apply accounting and financial standards, including minimum capital adequacy and liquidity ratios, specific to both 100 per cent foreign-owned banks and domestic banks, aligning with international practices. It will operate across two cities: financial hub Ho Chi Minh City and tourism-focused Danang. The government had earlier set a goal to have the centres operational this year. - Reuters
