- Vanke to seek bondholder approval to extend a 2 bln yuan bond due Dec 15
- Govt suggests 'market-oriented approach' on Vanke, Octus says
- CICC assesses Vanke debt; restructuring an option, source says
- Investors concerned over further govt support
SHANGHAI/HONG KONG, Nov 26 (Reuters) - China Vanke will seek bondholder approval to delay the repayment of a 2 billion yuan ($282.6 million) onshore bond, a filing late on Wednesday showed, a move that could trigger a new wave of anxiety in both financial and property markets.
A public bond extension would be the first for the state-backed property developer, a household name with many projects in China's biggest cities.
A debt restructuring by Vanke, with 364.3 billion yuan of interest-bearing liabilities, could also potentially dwarf defaults by privately owned peers Evergrande and Country Garden this decade.
Vanke did not immediately respond to Reuters' requests for comment.
The bond in question will mature on December 15, and the bondholder meeting is scheduled for December 10. No details of the extension terms were provided in the filing.
Vanke has another yuan bond worth 3.7 billion yuan due on December 28. Its next dollar bond maturity is in November 2027.
VANKE BONDS SLID ON WEDNESDAY
Its bonds tumbled earlier on Wednesday, after media hints of a possible restructuring of its debt reignited doubts about further government support for the crisis-hit sector.
Several of Vanke's yuan bonds slid more than 20%, with some down more than 30%, triggering suspensions of the company's seven exchange-traded bonds by the Shenzhen Stock Exchange.
Vanke's yuan bond due in March 2027 traded at 55 per 100 par value by 0555 GMT, down from 80 at the open, for a plunge of 35%.
Its 2027 dollar bond was bid at 39.748 cents on the dollar after the bondholder meeting filing, further down from 42.5 cents earlier in the day, data from Duration Finance showed. The bond was bid at around 55.4 cents on Tuesday.
On Tuesday, financial publication Octus said Beijing gave preliminary guidance to the government of Shenzhen, where state-affiliated Vanke is based, to consider a "market-oriented approach" for dealing with the developer's debt.
The term was a euphemism for restructuring, Octus cited the source of its report as saying.
Two people with knowledge of the situation told Reuters that state-owned China International Capital Corporation (CICC) had been brought in to assess Vanke's debt.
A debt restructuring was among the options the investment bank featured in an internal report to the central government a few weeks ago, one of the sources said.
Financial publication REDD was the first to report CICC's involvement on Wednesday.
CICC, the Shenzhen government and China's State Council, or cabinet, which oversees state-owned enterprises, also did not respond to requests for comment.
Vanke's Hong Kong-listed shares fell 6.3%, while its onshore shares slid to their lowest since 2008.
ENTRENCHED DEFLATIONARY PRESSURES
Deflationary pressures from sagging household and business confidence have become entrenched in China since the COVID-19 pandemic, particularly in housing.
New home prices fell in October at their fastest monthly pace in a year, and S&P Global Ratings says the market is still searching for a bottom.
Although China rolled out a series of key measures in the second half of 2024 to support the market, large-scale new stimulus has not been forthcoming this year. Recent policy steps have mainly reaffirmed existing commitments.
This month, state-owned Shenzhen Metro Group, which holds a stake of a third in Vanke, agreed to provide loans of up to 22 billion yuan in 2025 and the first half of 2026, a stock exchange filing showed, against collateral from Vanke.
Markets are replaying a pattern from the turn of the year, said Yao Yu, founder of Shenzhen-based credit research firm RatingDog.
At the time, Vanke bonds rebounded sharply on signs of state support following a steep sell-off amid speculation that the developer would not be able to meet debt repayment obligations.
"Now, market rumors suggest Shenzhen has sought help from Beijing, leaving two scenarios — no rescue, or central backing," Yao said.
($1 = 7.0775 Chinese yuan renminbi)
Reporting by Shanghai, Beijing and Hong Kong Newsrooms; Editing by Jacqueline Wong, Kevin Buckland, Clarence Fernandez and Jan Harvey
Source: Reuters