Vanke, a major Chinese real estate company mired in management difficulties, failed to extend repayment of debt due on the 15th.
According to Reuters and Bloomberg on the 14th (local time), Vanke proposed three options to creditors—a one-year extension of the repayment deadline for 2 billion yuan (about 420 billion won) in debt, credit enhancement, and compliance with the interest deadline—but was rejected. As a result, Vanke must repay the debt within five business days.
Vanke also requested a one-year extension for repayment of debt totaling 3.7 billion yuan (about 770 billion won) that comes due on the 28th of this month. A creditors' meeting is scheduled for the 22nd.
With the debt extension falling through, concerns over Vanke's liquidity have grown further. As its financial instability came to the fore, Vanke secured more than 30 billion yuan (about 6.3 trillion won) in shareholder loans from its largest state-owned shareholder, Shenzhen Metro.
However, as Shenzhen Metro recently tightened the conditions for funding support, Vanke's debt crisis is said to have deepened rapidly. Vanke's interest-bearing liability totals 364.3 billion yuan (about 76.2 trillion won).
China's real estate market has entered a prolonged slump since COVID-19. As major developers such as Evergrande and Country Garden have fallen into default one after another, concerns are mounting that turmoil at Vanke, whose largest shareholder is a state-owned enterprise, could further dampen market sentiment.
Market watchers, including Li Huan, co-founder of Forest Capital Hong Kong, said that extending debt maturities would not solve Vanke's fundamental problems and could create additional disruption in financial markets, stressing that a comprehensive liability restructuring is unavoidable.