China Vanke bonds bounce after plan to redeem early $138 million onshore notes

By Li Gu and Clare Jim

SHANGHAI/HONG KONG (Reuters) – China Vanke’s bonds gained on Monday after the state-backed developer mentioned it will redeem its 2027 notes value 1 billion yuan ($137.68 million) early in March.

Vanke’s announcement boosted investor confidence on its skill to repay its near-term monetary debt, together with a 3 billion yuan onshore bond due on Monday. Not like the redemption of the 2027 notes, the corporate just isn’t required to make a disclosure on Monday’s compensation.

Worries over Vanke’s liquidity have intensified this month because it faces a number of looming debt maturity deadlines. It has a complete $3.4 billion due this yr.

A state media report earlier this month alleged the developer’s CEO had been detained and that it may very well be topic to a takeover or reorganisation. The report was deleted inside hours of its publication.

In a submitting on Friday, Vanke mentioned it will train its rights to redeem the 2027 callable bond in March.

Analysts mentioned buyers had been taking the early redemption as an indication it will haven’t any drawback assembly its extra rapid obligations.

“Saying the redemption of the final bond for the primary quarter is equal to declaring that each one bonds for the quarter are free from default considerations,” mentioned Yao Yu, founding father of credit score evaluation agency Ratingdog.

Vanke’s Could 2028 onshore bond was quoted 15% greater on Monday morning at 73 yuan versus a 100 yuan par worth.

Bids for its Could 2025 greenback bond additionally rose to 80.608 cents on the greenback from round 75.7 cents on Friday.

Some analysts say a debt default is inevitable this yr with out contemporary liquidity help as Vanke’s month-to-month gross sales fall to under break-even ranges and it faces difficulties in borrowing from banks and disposing property. It fell to fifth by gross sales worth final yr from second in 2023.

The federal government within the southern metropolis of Shenzhen, the place Vanke has its headquarters, is stepping up conferences and coordination with native state enterprises on plans to comprise the corporate’s debt danger and on asset disposals, Reuters reported final week.

The developer has been attempting to promote various property, together with its stakes in logistics platform GLP and property administration unit Onewo, to ease liquidity strain, sources have mentioned.

It’s in superior talks to promote a controlling stake in VX Logistics to Singaporean sovereign wealth fund GIC, and a deal may very well be finalised as quickly as subsequent month, a supply instructed Reuters final week.

All three international score businesses have downgraded the developer deeper into junk this month, citing its eroding monetary flexibility and 2025’s unsure gross sales outlook.

($1 = 7.2634 Chinese language yuan renminbi)