China’s largest real estate developer, Vanke, has formally requested another extension of the grace period for a $150 million offshore bond, while offering additional collateral to secure the obligation. The move underscores ongoing financial stress in the sector.
- Vanke requested a 45-day extension to the grace period on a $150 million offshore bond, marking the second such request in 2025.
- The company offered RMB 1.2 billion in additional collateral to secure the obligation.
- Vanke’s onshore shares (000002.SZ) fell 6.3% and Hong Kong shares (3389.HK) dropped 4.1% following the announcement.
- The 220013.SZ bond yield rose to 12.5%, reflecting increased default risk perceptions.
- Credit default swaps widened by 42 basis points, signaling rising market concern.
- High-yield property ETFs saw outflows exceeding $380 million in one week.
Shenzhen-based Vanke (3389.HK, 000002.SZ) has submitted a formal request to extend the grace period on its 2026-dated offshore bond, marking the second such extension within six months. The original grace period was set to expire on January 10, 2026, but Vanke is now seeking a further 45-day extension, citing ongoing liquidity constraints and delayed property sales. The company has also pledged additional collateral, including securities valued at approximately RMB 1.2 billion (US$170 million), to support the debt obligation. The bond in question, issued under Vanke’s 2022 offshore program, carries a coupon rate of 6.8% and was initially scheduled to mature in 2026. The recent request follows a prior extension in July 2025, indicating persistent challenges in generating sufficient cash flow from property deliveries and sales. Despite a modest recovery in residential sales volumes in key markets like Shanghai and Guangzhou, Vanke’s overall revenue has declined by 22% year-on-year in the first half of 2025, according to internal financial reports. Market analysts note that Vanke’s actions signal growing vulnerability among China’s top-tier developers. The move has triggered a 6.3% drop in Vanke’s onshore shares (000002.SZ) and a 4.1% decline in its Hong Kong-listed shares (3389.HK) over the past three trading days. Credit default swaps (CDS) for Vanke have widened by 42 basis points since the announcement, reflecting rising perceived default risk. The 220013.SZ bond, a senior unsecured note issued in 2023, has seen its yield rise to 12.5%, up from 8.2% in late 2024. Investors in Chinese property bonds are reassessing exposure, with high-yield property ETFs experiencing outflows of over $380 million in the week following the announcement. The developments also raise concerns about broader sector stability, particularly given Vanke’s role as a bellwether for the industry. Regional lenders and non-bank financial institutions with exposure to Vanke’s project finance loans are now reviewing credit risk scenarios under stress testing models.