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Bond Market News
China Vanke Downgraded to Caa2 by Moody’s, Outlook Remains Negative
October 21, 2025
China Vanke was downgraded by a notch to Caa2 from Caa1 by Moody’s. The rating agency also downgraded the senior unsecured bonds issued by Vanke to Caa3 from Caa2. This is the third downgrade by Moody’s since the start of the year. The downgrade reflects Vanke’s increasing refinancing risk for sizable debt maturities over the next 6-12 months, including ~RMB 22bn ($3.1bn) in onshore bonds due or becoming puttable by September 2026, because of its deteriorating liquidity. The company’s reducing cash and operating cash flow, as a result of weak operations and tight funding access, will be insufficient to cover its repayment needs in this period, they added. Moody’s forecasts that Vanke’s gross contracted sales will further decline over the next 6-12 months, after dropping by 46% YoY in 1H2025. This is primarily on the back of subdued homebuyers’ confidence in weaker developers and creditors’ risk aversion to developers under liquidity stress. However, on the positive side, Shenzhen Metro’s provision of funding support to China Vanke, totaling ~RMB 26bn ($3.7bn) mainly in the form of shareholder loans, has helped the developer repay part of its maturing debt. While shareholder support will likely continue, uncertainty still remains on whether it can fully address China Vanke’s funding gap.
Vanke’s 3.5% 2029s has trended around 1.5 points lower since the beginning of the month, now trading at 67.8 cents on the dollar.
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