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Chinese officials are working to stabilize China Vanke after liquidity issues and uncertainty surrounding the CEO, according to Bloomberg. Reports suggest Vanke may face a government takeover and restructuring. Shenzhen officials held a closed-door meeting to discuss the company’s future, with plans to appoint new auditors and financial advisers to review its financials and projects. While Vanke was previously seen as less vulnerable due to state-backed Shenzhen Metro’s involvement, it faces significant debt, including $3.4bn in public bonds maturing this year. The company was downgraded by two notches to B- from B+, by both S&P and Fitch. The rating agencies cited increasing liquidity pressure due to weakening of sales and cash flow generation in addition to the company facing significant debt maturities this year. Yesterday, Vanke was downgraded by Moody’s to B3 citing similar rationale.
Vanke’s dollar bonds were up by 2-3 points across the curve, with its 3.15% 2025s up at 70.5 cents on the dollar.