HONG KONG, Dec 15 (Reuters) – China Vanke made a fresh effort to muster bondholder backing for an onshore debt repayment due this week and avoid a default after the state-backed developer’s initial plan was rejected, renewing concerns about the nation’s crisis-hit property sector.
Vanke will hold a second meeting to determine the fate of a 2 billion yuan ($283.56 million) note payment, a filing to the National Association of Financial Market Institutional Investors showed on Monday.
The meeting will start on Thursday and culminate with voting on December 22.
Bondholders rejected its first attempt to push back payment by a year, raising the risk of default for the developer. The bond tranche is due on Monday and has a five-business-day grace period.
WHO IS VANKE AND HOW BIG IS ITS DEBT?
Vanke was founded by Wang Shi in the southern city of Shenzhen in 1984, initially trading electronics.
It evolved into a property developer and dominated China’s home sales until 2016, becoming a household name.
It was also the first property developer to list in China in 1991.
At 114.7 billion yuan ($16 billion), Vanke’s home sales in the first 10 months of this year ranked it at No.6 among developers in China, according to industry researcher CREIS.
The ranking was down from No.2 in 2023 before its liquidity problem became public.
Vanke had received favourable financial treatment because of its partial ownership by the state. Currently Shenzhen Metro, directly under the Shenzhen government, holds a third of Vanke’s equity and its general manager Huang Liping was appointed as chairman of Vanke in October.
Its interest-bearing borrowings totalled 364.3 billion yuan ($52 billion) as of end-June, and it faces onshore bond maturities totalling 11.4 billion yuan in the six months through May 2026, while it has negative operating cash flow.
Vanke’s total liabilities were 873 billion yuan, versus 1.2 trillion yuan of total assets.
WHY DOES VANKE MATTER TO THE CHINA PROPERTY SECTOR?
Many other major developers, including privately owned Country Garden and state-backed Sino Ocean, have defaulted in the past few years without creating a market or financial sector meltdown.
But industry experts said a Vanke default could have a bigger impact due to the company’s focus on China’s top-tier cities, even though its liabilities are much smaller than Evergrande’s more than $300 billion.
Most of Vanke’s around 700 projects are in cities such as Shenzhen and Beijing, and a default could weigh on homebuyer confidence in those cities which is stabilising this year after Beijing’s repeated assurances.
While Vanke’s bank loans only accounted for 0.1% of the total system loans in China, according to a JPMorgan research note, banks could further shut their financing to the sector, squeezing developers that have not defaulted.
Also, 40% of Vanke’s loans were unsecured, which would bring a financial impact to the banks that have a larger exposure.
WHERE DOES THE CHINA PROPERTY CRISIS STAND NOW?
Into the fifth year of the property debt crisis, Beijing is still scrambling to revive a sector that once accounted for a quarter of China’s GDP, as it strives to reinvigorate the economy.
Compared to mid-2021 when the crisis began, triggered by Evergrande’s non-repayments, the property market has seen its home sales shrink to around half and undergone many corporate defaults, hitting homebuyer and investor confidence.
While top authorities repeatedly vowed to stop property prices from falling, they have stopped short of launching large-scale, forceful stimulus in 2025, unlike the previous three years.
According to Reuters’ calculations based on China’s statistics bureau data, home sales by floor area from January to November 2025 were lower by about half, compared with the same period in 2021.
WHAT DO INVESTORS SAY ABOUT A VANKE RESTRUCTURING?
If Vanke defaults on the yuan bond, analysts said that it would signal Beijing agreed to pull the plug on financial support and the developer would need to restructure all its debt.
There could be different approaches to the restructuring, with one of them similar to a deal led by peer Sunac completed this year that cut its onshore debt by more than half with a steep haircut.
Jinke, on the other hand, was the first nationwide property developer to undertake a court-led exercise and seek re-organisation of both onshore and offshore debt under Chinese bankruptcy law last year.
It is unclear what approach Vanke would take, but some analysts believe if the government allowed the developer to default, it would show Beijing was confident a restructuring would not trigger a major fallout.
Even if market sentiment deteriorates as a result, market observers said it could be a silver lining for the sector because policymakers might introduce more forceful stimulus next year.
($1 = 7.0548 Chinese yuan renminbi)
(Reporting by Clare Jim and China newsrooms; Editing by Sumeet Chatterjee and Muralikumar Anantharaman)
