Vanke Offers One-Year Extension for $20M Onshore Bond, Sources Say

Debt-laden real estate firm China Vanke has outlined a plan to extend the maturity of a CNY2 billion (USD280 million) onshore bond due this month by one year, according to sources familiar with the matter.

The company is aiming to postpone both principal and accrued interest payments on the bond for 12 months, without applying compound interest during the extension period, an industry insider revealed. The interest rate will stay fixed at 3 percent throughout the extension, and the accumulated interest during this period will be paid alongside the principal on the new maturity date.

Vanke announced on November 26 that it will hold a bondholders’ meeting on December 10 to vote on the extension of the CNY2 billion onshore bond, identified as 22 Vanke MTN004, which is set to mature on December 15. Bondholders need to cast their votes by midnight on December 12.

Following the announcement, Vanke’s stock prices plummeted amid concerns over potential default, should the extension request be rejected. Shares declined sharply—by 11 percent to CNY5.23 (73 cents) on the Shanghai Stock Exchange and by 7.2 percent to HKD3.60 (46 cents) in Hong Kong as of 10:40 a.m. today from their levels on November 26. The decline in bond prices has been even more pronounced during this period.

Previously, other major real estate developers facing similar repayment issues typically proposed phased repayment plans rather than outright extensions of both principal and interest for a year.

Although Vanke initially discussed a phased repayment approach with bondholders, the final decision was to extend both principal and interest for one year, according to industry sources.

As of September 30, Vanke had repaid a total of CNY28.9 billion (USD4.1 billion) in onshore and offshore bonds this year. An additional medium-term note with a CNY3.7 billion balance is due at the end of December, with approximately CNY12.4 billion in onshore bonds maturing in 2026, plus CNY7 billion in offshore bonds and over CNY3 billion in onshore bonds maturing in 2027 still outstanding.

Facing liquidity constraints, Vanke has relied heavily on unsecured loans from its controlling shareholder, Shenzhen Metro Group, to service maturing debt. This year alone, Shenzhen Metro has extended nearly CNY30.8 billion in such loans.

Since the loan limit has been reached earlier this year, Vanke is now required to offer collateral for these loans. Failing to do so could give Shenzhen Metro the right to demand early repayment of both principal and interest, according to a company statement released last week.

Despite Shenzhen Metro’s support, Vanke’s financial condition shows little sign of improvement. The company posted a net loss of CNY28 billion in the first three quarters of the year, a 56 percent increase over the previous year, with the third quarter alone nearly doubling to CNY16.1 billion, according to its latest financial report.

The firm’s operating revenue decreased 27 percent to CNY161.4 billion (USD22.6 billion) over the first nine months of the year, reaching the lowest level since 2018. In the third quarter, revenue also fell 27 percent year-over-year to CNY56.1 billion.