China Vanke bonds tumbled Tuesday after the embattled property developer requested an extension on repayment of its onshore bonds, fueling fresh concerns about the sector’s ongoing liquidity crisis. The company is seeking a 12-month delay on the maturity of its 13.83 billion yuan ($1.9 billion) bond, according to a stock exchange filing.The move by Vanke, once considered one of China’s most financially stable developers, underscores the deepening distress within the country’s property market – a critical pillar of the world’s second-largest economy. The request impacts investors holding Vanke’s onshore debt and raises broader anxieties about potential defaults among other developers facing similar pressures. The delayed repayment coudl further restrict Vanke’s access to funding and potentially impact its ability to complete ongoing projects, affecting homebuyers and contractors.
Vanke cited difficulties in its operating environment and a need to maintain sufficient cash flow as reasons for the extension request. The company reported a 28.7% year-on-year decline in contracted sales for November, adding to investor worries.Trading of several Vanke bonds was temporarily suspended Tuesday, with prices falling sharply before resumption. The developer’s onshore bonds due in 2024 were trading at around 75 cents on the dollar, down from over 90 cents last week, according to Reuters data. Shares of China Vanke fell as much as 6.6% in Shenzhen trading.
China’s property sector has been grappling with a liquidity crunch since 2021, triggered by government efforts to curb excessive debt and speculation.Major developers like Evergrande and Country Garden have already defaulted on their obligations, sending shockwaves through the market. The government has introduced some support measures, but concerns remain about the effectiveness of these policies in stabilizing the sector.