China Vanke, the latest developer to teeter in the country’s long-running real estate crisis, said bondholders agreed to a plan that gave the company a 30-day grace period to negotiate repayment of a $285 million bond.
Approval from bondholders after a vote on Monday provided Vanke with a temporary lifeline, preventing the company from immediately tipping into default for failing to repay a bond that matured on Dec. 15. However, the bondholders again rejected Vanke’s proposal to delay repayment by one year.
Vanke, which has more than 126,000 employees and carries more than $50 billion in debt, has until Jan. 28 to reach a deal to either delay payments or pay the principal to avoid default, according to a filing with the Hong Kong Stock Exchange.
Vanke is the latest and most urgent test of the government’s handling of China’s long-running real estate crisis, which has unsettled the economy and challenged policymakers’ resolve on whether to bail out debt-laden developers, even if doing nothing risks pushing the financial system to the brink.
Chinese officials did not intervene to rescue China Evergrande or Country Garden, once considered the country’s two largest developers, as both crumbled under the weight of enormous debts. Evergrande filed for bankruptcy protection two years ago. Around that time, Country Garden defaulted on a bond, with some creditors pushing the company to liquidate.
Vanke was viewed differently from the two privately held developers because its largest shareholder is the state-owned railroad company Shenzhen Metro, which had repeatedly extended loans to Vanke over the past few years to cover obligations related to the developer’s debts.
This year, after a $6 billion loss in 2024, Vanke’s top executives stepped down and were replaced by executives from state-owned firms. Shenzhen Metro has extended more than $3 billion in loans this year to Vanke, even as the company continues to face a severe cash crunch. In a midyear corporate filing, Vanke said that, as of the end of June, $22 billion of its debt was due within the next 12 months.
But more recently, Shenzhen Metro has begun imposing stricter borrowing terms on Vanke. In early November, Shenzhen Metro demanded that Vanke pledge collateral to back up unsecured loans it had already extended to the developer. Then, Vanke, for the first time, asked bondholders to accept a delay in repayment of a bond.
Vanke offered three proposals to bondholders seeking a one-year delay of payments due on Dec. 15. None of the proposals received enough support to meet the 90 percent approval threshold, moving the company closer to default.
Vanke said it had a “grace period” of five working days, which expires on Dec. 22, after failing to make a payment on time.
The developer’s negotiations with bondholders point to the “Chinese authorities’ preference for market-oriented support approaches, rather than providing blanket support to individual developers — even some government-linked entities,” the credit ratings agency Fitch said in a report this month.
Daisuke Wakabayashi is an Asia business correspondent for The Times based in Seoul, covering economic, corporate and geopolitical stories from the region.
The post China Vanke Gets Temporary Lifeline to Prevent Debt Default appeared first on New York Times.
