China's property crisis is resurfacing with new force as China Vanke -- long viewed as one of the country's most stable developers -- faces a sharp deterioration in its debt profile, raising uncomfortable echoes of Country Garden's near-collapse, which began in late 2023 and worsened into early 2024.
Vanke Bonds Crash On First-Ever Repayment Delay
Vanke's bonds plunged on Thursday after the state-backed company sought to delay an onshore bond repayment for the first time, according to Reuters. The move rekindled fears of another major developer sliding toward restructuring, a scenario that could rattle an already fragile sector.
The selloff began earlier in the week following a media report suggesting Beijing had instructed local authorities in Shenzhen, where Vanke is based, to explore a "market-oriented approach" to handling its debt -- widely interpreted as restructuring. The slump accelerated after Vanke announced plans to seek bondholder approval to push back repayment of a 2 billion yuan ($280 million) onshore bond due Dec. 15.
An offshore Vanke dollar bond due in November 2027 fell to 23 cents on the dollar on Thursday, compared to around 55 cents earlier in the week, Reuters reported.
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Warnings Of Contagion As Investors Flee
Hayman Capital Management CIO Kyle Bass warned that the pressure on Vanke marks a dangerous new phase in China's real estate downturn.
"Despite repeated efforts from state-owned Shenzhen Metro to stabilize the company, free-fall continues," Bass said.
Analysts say Vanke's situation is significant because, unlike Evergrande or Country Garden -- both privately owned -- Vanke has long been considered a bellwether with strong state links.
Its largest shareholder, state-owned Shenzhen Metro, owns roughly 30% and recently agreed to provide up to 22 billion yuan in loans through mid-2026. But analysts at Moody's and UBS noted that even strong state support may no longer be enough to guarantee liquidity in a sector experiencing persistent stress.
Parallels To Country Garden's Collapse
The parallels with Country Garden are difficult to ignore. In early 2024, Country Garden faced a liquidation petition after missing a loan repayment and later defaulting on multiple offshore bonds. The company said at the time that it would "proactively communicate" with creditors and work toward a holistic restructuring plan. But months of delays, adviser turnover, and missed coupon payments ultimately eroded market confidence.
JPMorgan analysts said this week that nearly all developers seeking repayment extensions in recent years ultimately defaulted. They warned that Vanke "will likely follow a similar path" unless state support intensifies.
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