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Business Times
19-05-2025
- Business
- Business Times
Vanke bond's 144% rally shows credit strain easing after rescue
FINANCIAL strains are easing at China Vanke after its largest state shareholder threw a lifeline to the company that proved too big to fail. Since local government officials intervened in January to stabilise Vanke's operations and finances, the builder has repaid publicly traded bonds with a combined principal of 14.4 billion yuan (S$2.6 billion). That included a 3.15 per cent US dollar bond with US$423 million outstanding which matured on May 12, its only such note of the year, Bloomberg reported. In four months, its longer dated US dollar bonds have bounced more than 44 US cents to above 74 US cents on the US dollar. While that's still a distressed level, the move suggests investors holding such assets since Jan 16 through the turmoil this year may have amassed a return of nearly 144 per cent as of May 16. Vanke's stocks remain lacklustre, with its Hong Kong and mainland-traded shares both down about 6 per cent since the late January overhaul. 'Near-term default risks have likely abated, considering the expectation of shareholder support,' Leonard Law, a senior credit analyst in Lucror Analytics Singapore, wrote in a note last week. Government rescue efforts for Vanke are trickling out. Since late April, Vanke announced it received two generous loans from its largest shareholder Shenzhen Metro Group. Vanke may prepay at any time, extend the repayment period with the lender's consent, and is allowed to pay the interest together with the principal at maturity, according to terms disclosed in exchange filings. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up A total of US$6.1 billion of Vanke's debt has emerged from distressed trading levels since Jan 17, according to data compiled by Bloomberg News. The recent two loans stood out from the previous ones extended around February, as no requests for asset pledging were mentioned. 'These two loans without collateral signal Shenzhen Metro has stepped up its support for Vanke,' said Yan Yuejin, vice-president of Shanghai E-house's research arm. All of Shenzhen Metro's four loans this year carry a floating interest rate of 76 basis points lower than China's benchmark lending rate for short-term loans, which stood at 2.34 per cent as at early May. They are all earmarked to help Vanke repay principal and interest on publicly issued bonds, filings showed. 'We recognise Vanke's efforts to fulfil delivery and debt obligations,' with state help, Citigroup analysts led by Griffin Chan wrote in a May 1 report. Still, the Wall Street bank downgraded the company's stock to neutral due to its continued losses. Concerns linger Despite state backing, Vanke is not completely out of the woods. The builder and its subsidiaries still have 25.4 billion yuan of onshore bonds maturing or facing redemption this year, according to data compiled by Bloomberg. The maturity wall comes as the developer's contract sales continued to weaken, which is set to widen its funding gap, according to Bloomberg Intelligence analysts Kristy Hung and Monica Si. Fitch Ratings downgraded Vanke's long-term issuer default score by one notch to CCC+, a rating that indicates a default is a real possibility. Vanke's sales declined nearly 40 per cent on year in the first quarter, worse than Fitch's expectation of a 20 per cent full-year decline. The drop widened to 45 per cent in April from a year prior, according to China Real Estate Information Corp, more severe than an 8.7 per cent drop seen in peers. 'We expect the weak fundamentals for Vanke to continue without a rosy recovery of the overall sector,' Iris Chen, a credit desk analyst at Nomura International HK, wrote in a recent note in April. BLOOMBERG
South China Morning Post
15-05-2025
- Business
- South China Morning Post
Debt-laden China Vanke gets US$215 million loan from state-owned stakeholder
Indebted property developer China Vanke has secured a 1.55 billion yuan (US$215.4 million) loan from state-owned Shenzhen Metro Group, offering some respite as it looks to meet US$3.4 billion in debt obligations this year. Shenzhen's railway operator, Vanke's largest shareholder with a 27.2 per cent stake, is extending the loan to the cash-strapped developer to help cover interest and principal repayments, according to a stock exchange filing on Wednesday evening. The loan has a 36-month term and may be extended or repaid early upon mutual agreement. It carries an annual interest rate of 2.34 per cent, below the one-year loan prime rate banks offer to their most creditworthy clients. Repayments are structured with 0.5 per cent due every six months, with the remaining 97 per cent to be settled in the final instalment. Shenzhen Metro has given Vanke loans totalling 10.3 billion yuan this year, the filing showed. The financial support follows a government-led shake-up in February, when the southern city's authorities tightened control over the developer by appointing 10 new executives, replacing former CEO Zhu Jiusheng and chairman Yu Liang, who stepped down in January. The government intervention helped Vanke repay a dollar bond due on Monday, clearing its only such obligation of the year, Bloomberg reported, citing people familiar with the matter. But the positive development failed to ease growing concerns in the financial markets. Fitch Ratings on Wednesday downgraded Vanke's bonds further into junk territory, to CCC+ from B-. The agency also downgraded its Hong Kong subsidiary to CCC from CCC+.
Reuters
30-04-2025
- Business
- Reuters
China Vanke slips on deeper quarterly losses, A-share sale plan
HONG KONG, April 30 (Reuters) - Shares of China Vanke fell on Wednesday after the state-backed property developer posted steeper losses in the first quarter and approved a plan to sell A-shares representing 0.61% of its total share capital. Vanke's Hong Kong-listed shares dropped as much as 2.9% in early trading, while shares listed in Shenzhen ( opens new tab eased 2.6%. Vanke, one of China's leading property developers, launched a senior management reshuffle in January that increased state oversight and intervention to contain any non-repayment risks amid a prolonged market slump. The company's net loss in January-March came in at 6.2 billion yuan ($852.26 million), compared with a loss of 362 million yuan a year ago, according to filings late on Tuesday. Its core loss, which excludes fair value changes, deteriorated to 6 billion yuan from 1.7 billion yuan. Vanke attributed its quarterly net loss — which came on the heels of a record full-year loss of 49.5 billion yuan in 2024 — to a decline in property delivery volumes and a narrowing gross margin. During the reported period, Vanke secured 13.9 billion yuan in new financing and refinancing, with its average financing cost falling by 21 basis points year-on-year to 3.39%. In a separate filing, Vanke said its major shareholder, state-owned Shenzhen Metro, will extend a 3.3 billion yuan loan to the company to repay public bonds. The new shareholder loan follows a 2.8 billion yuan lending in February, showing another sign of intensified efforts by the government to stabilise the property developer. Vanke said it will switch its auditor to Deloitte from KPMG, ending a relationship of more than 20 years with the latter firm. ($1 = 7.2748 Chinese yuan)
Yahoo
12-02-2025
- Business
- Yahoo
Vanke Gets $383 Million Loan From State Backer for Debt
(Bloomberg) -- China Vanke Co. won more support from authorities as its largest state shareholder agreed to provide up to 2.8 billion yuan ($383 million) to help the struggling developer repay outstanding debt. Saudi Arabia's Neom Signs $5 Billion Deal for AI Data Center Nice Airport, If You Can Get to It: No Subway, No Highway, No Bridge Sin puente y sin metro: el nuevo aeropuerto de Lima es una debacle The Forgotten French Architect Who Rebuilt Marseille In New Orleans, an Aging Dome Tries to Stay Super Shenzhen Metro Group Co., which holds a 27% stake in Vanke, signed a three-year secured loan agreement with the firm on Monday, according to a filing to the Hong Kong stock exchange. Under the deal, Vanke will provide asset collateral worth up to 4 billion yuan to Shenzhen Metro through an 18% stake in its property management unit Onewo Inc.. 'This fully reflects Shenzhen Metro Group's support for the company,' Vanke said in the filing, adding that the loan agreement 'would be the most effective way to raise funds for the group.' Vanke must repay 5 billion yuan of bonds this month, according to data compiled by Bloomberg. Throughout the year, the cash-strapped developer has $4.9 billion of bonds maturing or facing redemption options. Default worries sent some of its bond prices down by 30% last month and prompted local authorities to step in to bolster confidence. 'Although the size is not big enough to cover Vanke's near term maturities, we think the gesture should restore some market confidence,' said Iris Chen, credit desk analyst at Nomura International HK Ltd. Vanke's dollar and onshore bonds rose Tuesday. Its 3.975% dollar note due 2027 jumped 4.9 cents to 70.5 cents in Hong Kong trading, while onshore, its 3.64% bond due 2027 jumped 14.2% to 81 yuan. The financial backing from Shenzhen Metro follows Vanke's overhaul in late January when two top executives stepped down and the company warned of a record $6.2 billion loss. An official from Shenzhen Metro will take over as chair, while local and state governments in Vanke's home base of Shenzhen vowed to 'proactively support' its operations. The rare state support signaled that Vanke may be too big to fail, which would have significant implications for China's housing market and economy. Vanke, which employs about 130,000 people, ranked fifth by sales in 2024. The loan facility pays a floating interest rate of 76 basis points below the one-year loan prime rate, or about 2.34% as of the announcement date. The initial loan-to-value ratio of the asset collateral is about 70%, which is higher than the prevailing market standard that ranges from 30% to 60%. --With assistance from Shuiyu Jing. (Updates with quote and bond trading activity in fifth and sixth paragraphs) Trump's Tariffs Make Currency Trading Cool Again After Years of Decline Trump Promised to Run the Economy Hotter. His Shock and Awe May Have a Chilling Effect Why Fast Food Could Be MAHA's Next Target The Reason Why This Super Bowl Has So Many Conspiracy Theories The Game Changer: How Ely Callaway Remade Golf ©2025 Bloomberg L.P.
Yahoo
11-02-2025
- Business
- Yahoo
China Vanke gets $383 million loan from state shareholder
HONG KONG (Reuters) - Cash-strapped China Vanke said its major shareholder, state-owned Shenzhen Metro, is giving it a 2.8 billion yuan ($383.12 million) loan, in a sign the government is stepping up efforts to stabilise the property developer. Vanke, in return, will pledge 211.5 million shares, or 18.3%, of its listed property services unit, Onewo Inc, as collateral, the company said in a filing late on Monday. The loan is the first liquidity support from Shenzhen Metro after a senior management reshuffle in Vanke last month that increased state oversight and intervention to contain any non-repayment risks. Vanke's bonds jumped on Tuesday after the loan announcement, with the offshore bond due May 2025 bid at 97.111 cents on the dollar in morning trade, up from 94.8 cents a day ago, while its yuan bond due March 2027 rallied 13.5%. In a separate filing on Monday, Vanke published a repayment announcement for its 3 billion yuan notes maturing on February 16, signalling that it will make the repayment on time. Analysts said the Shenzhen Metro loan shows the authorities' efforts to avoid a bond default by Vanke. They added that it is a good deal for Vanke because of the higher-than-market loan to value ratio at 70% and a favourable interest rate of 2.34% as of Monday's calculation based on the loan prime rate (LPR). They, however, said the amount is small compared to the more than 30 billion yuan of Vanke public bonds maturing in the remainder of 2025. JPMorgan said in a research note that given Shenzhen Metro only had 30 billion yuan of cash, the authorities will need to either inject more capital into the railway company owned by the Shenzhen government, or ask other state-owned companies to acquire assets from Vanke. The brokerage said Vanke's liquidity will also hinge on its home sales. "If Vanke's sales become worse than expected, such that the funding required for not just bond repayment but also for home delivery has become larger than expected, the point might come where Shenzhen Metro may consider if bond restructuring/extension might be a more pragmatic approach," it wrote. Vanke currently holds a 57% stake in Onewo. It said in the filing it will use the proceeds from the shareholder loan to repay debt in the open market. Shares of Vanke in Hong Kong edged up 0.9% by noon on Tuesday, while its shares in Shenzhen slid 1.5%. Shares of Onewo were down 1.1%. ($1 = 7.3085 Chinese yuan renminbi)
