China Vanke Bondholders Reject Payment Extension, Elevating Default Risk
The logo of China Vanke is shown at a news briefing in Hong Kong as the property developer confronts looming repayment deadlines. © Reuters
December 14, 2025 13:19 JST
(Reuters) -- China Vanke failed to win bondholder approval for a one-year postponement of a bond payment due this Monday, a filing revealed. The rejection heightens the chance of a default for the developer and renews worries about the beleaguered property sector.
Because the vote failed, Vanke now has a five-business-day grace period to make a 2 billion yuan ($280 million) onshore bond payment, according to a filing with the National Association of Financial Market Institutional Investors.
This setback for Vanke, one of China’s best-known developers with projects in major cities, rekindles fears about an industry that has seen several prominent companies default in recent years.
Vanke did not respond to requests for comment outside regular hours about the late Friday vote results, first reported by Bloomberg News.
The property crisis has already hit heavyweights like former giant China Evergrande, which was ordered into liquidation by a Hong Kong court and was delisted this year after a liquidity squeeze triggered by tighter regulations beginning in 2021.
Since then, the sector—once responsible for roughly a quarter of China’s GDP—has faced slowing demand. Homebuyer confidence has weakened as developers’ defaults weigh on the housing market, dampening growth in the world’s second-largest economy.
A Reuters quarterly survey published this month projects Chinese home prices to fall 3.7% this year, with continued declines next year before stabilizing in 2027.
For a postponement to gain approval, it would have required support from at least 90% of holders at the meeting, which began on Wednesday. The proposal to defer principal and interest payments by a year without extra credit support was rejected, with 76.7% voting against it, according to the filing.
Two other proposals aimed at the same bond, incorporating credit enhancement measures, drew some support—one achieved 83.4% approval—but neither reached the 90% threshold.
In parallel, Vanke is seeking a one-year extension on a separate yuan bond valued at 3.7 billion yuan, due December 28, with a bondholder meeting slated for December 22.
Onshore notes for Vanke traded at distressed levels of roughly 20–30 yuan per 100 yuan face value, while its offshore dollar bonds hovered around 20 cents on the dollar.
S&P Global downgraded Vanke on November 28, citing unsustainable financial commitments due to weak liquidity and noting the firm’s vulnerability to nonpayment or distressed restructuring.
Vanke is approximately 30% owned by state-backed Shenzhen Metro Group. This government backing has led some analysts to believe it could prevent a complete collapse, though the current vote results show the fragility of even state-supported developers.
Would you like a breakdown of what these bond extensions mean for investors, or a explainer on how onshore vs. offshore bonds differ in risk and repayment priority?
