China Vanke, one of the country’s major state-backed property developers, narrowly avoided default on Monday after onshore bondholders agreed to extend the grace period for a CNY 2 billion bond repayment, according to Reuters’ sources. The move offers a temporary respite to investor concerns about a deepening debt crisis in the Chinese property sector.
Despite this reprieve, sources noted that bondholders once again turned down the developer’s proposal to postpone repayment of the bond by one year—a plan that had been adjusted to include payment of overdue interest within the current grace period, which ended Monday. The bond matured on December 15, and Vanke’s initial request for a repayment delay had already been rejected.
The newly approved extension allows for a 30 trading-day grace period, giving Vanke until January 27 to reach an agreement with creditors on revised payment terms. Failure to secure a deal by then would likely push the developer into default, requiring it to address all outstanding debt.
Vanke has also initiated a separate vote for another onshore note—a CNY 3.7 billion bond maturing on December 28. The company is seeking approval to delay principal and interest payments by one year and to lengthen the grace period from five to 30 trading days. Voting for this proposal began Monday and will conclude Thursday.
On the market, Vanke’s Shenzhen-listed shares edged up 0.6% by Monday’s close, while its Hong Kong shares erased earlier gains to finish down 1.9%. The prices of its yuan-denominated bonds remained largely steady.
Last week, ratings agency Fitch downgraded Vanke’s credit rating by two notches to “C,” signaling a failure to meet debt obligations. The agency warned that if the Shenzhen-based developer misses debt payments after the grace period, its rating would be cut further to “restricted default.”
