By Jiahui Huang
China Vanke's proposal to delay repayment of an onshore bond led to trading halts in three other local notes and triggered a selloff in Chinese property developers, ratcheting up fears about the country's drawn-out real-estate crisis.
Vanke, one of China's biggest real-estate companies, was once regarded as among the country's most solid developers. It is among the few Chinese major developers that has yet to default amid the country's massive property bust.
In a filing late Wednesday, the company said it is seeking to delay payment of the principal on a 2 billion yuan ($282.5 million) medium-term note due Dec. 15.
The move sparked a broad selloff in the bond and equity markets. Some of Vanke's onshore bonds dropped by more than 30%, triggering trading halts in Shenzhen. Chinese real-estate stocks fell sharply in Hong Kong, with the Hang Seng Mainland Properties Index, a gauge of developers listed in the city, dropping as much as 2.1% in early trading Thursday.
Shares of China Vanke slid as much as 8.5% in Hong Kong, hitting a record low before paring the losses to 4.4% by midday. Shimao Group led the decline among other property stocks, dropping 4.8%. Longfor Group fell 2.1% and Agile Group shed 1.3%. The benchmark Hang Seng Index rose 0.3%.
Vanke's surprise request to delay repayment on local debt highlights the continuing cash-flow uncertainties facing Chinese developers and has spurred more questions about the continued spread of the real-estate downturn. China's property sector, once a driver of the country's economic growth, has been in a yearslong slump, with many major property developers suffering liquidity crises and defaulting on their debts.
"Vanke's proposed delay in repayment reflects the firm's lingering liquidity crunch, which weighs heavily on its debt-servicing capabilities," Morningstar analyst Jeff Zhang said.
The developer, a top property pick among many analysts, been getting support from state-owned Shenzhen Metro Group amid the sector crisis. About one-third of Vanke's shares are held by the rail operator. In early November, Vanke said it could borrow up to 22 billion yuan from Shenzhen Metro before June 30, 2026, with 2.29 billion yuan still available for withdrawal.
The lynchpin is the negotiation with bondholders, who will likely require higher interest rates and additional pledges for the extension, Zhang said.
"If the negotiation falls through, we foresee significant deterioration in investors' sentiment on China property sector, as Vanke is expected to remain safe from defaults," Zhang said.
That said, Zhang thinks China's central and local governments would aim to contain the spillover effects of Vanke's troubles, so they may intervene by facilitating the agreement with major creditors.
Earlier this month, S&P Global Ratings downgraded China Vanke's credit rating further into junk territory, to CCC from B-minus, saying the company's financial commitments appear to be unsustainable.
The ratings company in its report said Vanke's contracted sales between January and October have shrunk by about 43% from a year earlier, weaker than its previous expectation of a 40% drop for the full year. In 2026, it estimated that the company's contracted sales could slip further to 103 billion yuan.
"China Vanke could default on its debt obligations if it does not receive timely and sufficient loans from its largest shareholder, Shenzhen Metro," S&P Global Ratings said.
Write to Jiahui Huang at jiahui.huang@wsj.com
(END) Dow Jones Newswires
November 27, 2025 00:14 ET (05:14 GMT)
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