Vanke’s Bonds Surge on $2.83B Debt Delay Plans

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Several bonds issued by the debt-laden property developer experienced significant gains today after the company announced three potential options to extend repayment on nearly 20 billion yuan (approximately $2.83 billion) worth of medium-term notes.

Today, six of the company’s domestic bonds saw remarkable increases, with intraday rises reaching as high as 20 percent, which led to a temporary trading suspension. The most notable was the 22 Vanke 02 bond, which surged nearly 44 percent.

On December 5, the company revealed three proposals for extending bond maturities: a 12-month delay, the inclusion of irrevocable full joint-liability guarantees from their major shareholder, Shenzhen Metro Group, or other collateral arrangements deemed acceptable by investors, provided by other state-owned enterprises in the city.

These options can only be implemented if at least 90 percent of bondholders consent, the company stated.

Late last month, the firm announced plans to hold a bondholders’ meeting on December 10 to consider extending a 2 billion yuan bond, the 22 Vanke MTN004. An additional meeting is scheduled for December 22 to discuss extending bonds totaling 3.7 billion yuan. Combined, these sums amount to roughly 5.87 billion yuan in principal and interest payments.

The company reported a net loss of 16.1 billion yuan (around $2.3 billion) for the third quarter ending September 30, with operating revenue declining 27.3 percent from the previous year to 56.1 billion yuan (about $7.9 billion). For the first three quarters, the net loss reached 28.1 billion yuan amid a 26.6 percent decrease in revenue, which fell to 161.4 billion yuan (roughly $22.8 billion).

Interest-bearing liabilities payable in the second half of this year and the first half of next year exceed 155.8 billion yuan.

Shares traded in Shenzhen closed slightly lower at 4.91 yuan (approximately 69 US cents), down 0.8 percent, while the company’s stock listed in Hong Kong dropped 3.1 percent to HKD 3.46 (around 44 US cents).