[HONG KONG] Investors are awaiting the results of a vote on property developer China Vanke’s plan to delay repayment of a two billion yuan (S$367 million) bond by a year and extend its grace period, as it seeks to avoid an immediate default.
Ever since China Evergrande triggered a debt crisis in the country’s massive property sector in 2021, many developers have failed to make bond repayments without roiling markets, however, a Vanke default could have a bigger impact.
Industry experts said that Vanke’s focus on the country’s top-tier cities could weigh on homebuyer confidence in those locations, where housing prices have been stabilising, and could rock the property sector, which once made up 25 per cent of China’s economy.
Shenzhen-based Vanke is seeking bondholders’ approval for a sweetened proposal to delay repayment for a bond that matured on Dec 15 in return for payment of overdue interest, after its first attempt at pushing back repayment failed earlier this month.
It is also seeking to extend its grace period to 30 business days from five now. Its current grace period ends on Monday.
The second bondholder vote started on Thursday (Dec 25) and concluded at 0200 GMT on Monday. The result is expected to be released after the market closes on Monday.
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Shenzhen-listed shares of Vanke firmed 0.8 per cent in morning trading, while its Hong Kong-listed shares rose 1.7 per cent.
Ratings agency Fitch last week downgraded Vanke by two notches to “C”, and said it would downgrade the Shenzhen-based developer again to “restricted default” if it experiences an uncured expiry of the original grace period or fails to meet any of its debt obligations. REUTERS
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