BEIJING | SHANGHAI: China Vanke bonds plunged on Tuesday after the state-backed developer, a bellwether for the country’s property sector, sought a one-year deferral on an onshore bond repayment.
China Vanke, once the country’s top home builder by sales, is trying to avert default following a prolonged property slump that has battered all its main rivals.
One yuan bond due May 2028 fell as much as 22% to 23 per 100 par value, prompting an early trading suspension by the Shenzhen Stock Exchange. Most of the developer’s exchange-traded bonds are at similar prices.
Vanke has asked holders of a 2 billion yuan ($283 million) bond maturing on December 15 whether it could delay both principal and interest payments until the same day next year, three sources told Reuters on Tuesday. The coupon would remain at 3% during the extension, they said.
China Vanke, which is 30%-owned by Shenzhen Metro, declined to comment.
The delay request would be the developer’s first for an onshore bond. The company flagged the extension last week without disclosing how long a delay it was seeking. A bondholder meeting is set for December 10 and the proposal requires approval from 90% of holders to pass.
Market participants are divided on whether bondholders will approve the plan.
One source said that without collateral and with a straight, unsecured extension of both principal and interest, the likelihood of bondholder approval is low.
Another source said that while investors are clearly unhappy with the extension plan, it could still secure approval after stakeholders hammer out a compromise.
The people declined to be named as the matter is private.
Bloomberg first reported the extension plan on Monday.
