China Vanke bonds jump after plan to redeem early $138 mln onshore notes
Vanke's announcement boosted investor confidence on its ability to repay its near-term financial debt, including a 3 billion yuan onshore bond due on Monday. Unlike the redemption of the 2027 notes, the company is not required to make a disclosure on Monday's repayment.
Worries over Vanke's liquidity have intensified this month as it faces several looming debt maturity deadlines. It has a total $3.4 billion due this year.
A state media report earlier this month alleged the developer's CEO had been detained and that it could be subject to a takeover or reorganisation. The report was deleted within hours of its publication.
In a filing on Friday, Vanke said it would exercise its rights to redeem the 2027 callable bond in March.
Analysts said investors were taking the early redemption as a sign it would have no problem meeting its more immediate obligations.
"Announcing the redemption of the last bond for the first quarter is equivalent to declaring that all bonds for the quarter are free from default concerns," said Yao Yu, founder of credit analysis firm Ratingdog.
Vanke's May 2028 onshore bond was quoted 15% higher on Monday morning at 73 yuan versus a 100 yuan par value.
Bids for its May 2025 dollar bond also rose to 80.608 cents on the dollar from around 75.7 cents on Friday.
Some analysts say a debt default is inevitable this year without fresh liquidity support as Vanke's monthly sales fall to below break-even levels and it faces difficulties in borrowing from banks and disposing assets. It fell to fifth by sales value last year from second in 2023.
The government in the southern city of Shenzhen, where Vanke has its headquarters, is stepping up meetings and coordination with local state enterprises on plans to contain the company's debt risk and on asset disposals, Reuters reported last week.
The developer has been trying to sell a number of assets, including its stakes in logistics platform GLP and property management unit Onewo (2602.HK), opens new tab, to ease liquidity pressure, sources have said.
It is in advanced talks to sell a controlling stake in VX Logistics to Singaporean sovereign wealth fund GIC, and a deal could be finalised as soon as next month, a source told Reuters last week.
All three global rating agencies have downgraded the developer deeper into junk this month, citing its eroding financial flexibility and 2025's uncertain sales outlook.
($1 = 7.2634 Chinese yuan renminbi)
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