China Vanke Co., Ltd. has made significant concessions, described as "cutting flesh," by offering a "40% down payment + a fixed 100,000 yuan payout + pledge of project receivables," reflecting its bottom-line thinking of "avoiding default on public bonds."
A critical development has emerged in China Vanke's negotiations for the extension of multiple debts. On January 21, Vanke announced that the bondholders' meeting for the "21 Vanke 02" bond passed a proposal to adjust the principal and interest repayment arrangement for the repurchased portion, buying the company temporary space to avoid a substantive default. Boosted by this news, the prices of several Vanke bonds rose that day, with 21 Vanke 06 gaining over 4% and 21 Vanke 04 increasing by more than 3%. Bai Wenxi, Deputy Chairman of the China Enterprise Capital Alliance, commented that the approval of Vanke's extension plan for "21 Vanke 02" provides the company with a temporary breathing spell amid its liquidity crisis, but it is far from being "in the clear." He stated that, judging by the terms, Vanke's one-time offer of a "40% down payment + a fixed 100,000 yuan payout + pledge of project receivables" already constitutes a "cutting flesh" concession, reflecting its underlying strategy of prioritizing the avoidance of default on public bonds. In the short term, the plan averts a technical default on January 22 and provides a replicable template for the subsequent negotiations on two medium-term notes totaling 5.7 billion yuan (22 Vanke MTN004 and 005), which might lead to a slight recovery in market confidence, but it also exposes the deep-seated difficulties Vanke faces.
A Difficult Breathing Space The approved proposal contains four key clauses: First, it adds a fixed payout arrangement: for each account supporting the proposal, Vanke will pay out no more than 100,000 yuan on January 30, 2026 (capped at the remaining principal amount), with this portion of the principal not accruing interest before payment. Second, it outlines the principal repayment arrangement for the repurchased portion. After deducting the aforementioned fixed payout, 40% of the remaining principal will be repaid on January 30, 2026, with the remaining 60% extended by one year to January 22, 2027. This means creditors avoid the passive situation of a "full principal postponement" and can receive actual funds upfront, directly addressing their most urgent liquidity needs. Third, it details the interest payment arrangement. Interest on the repurchased portion will be paid in installments, synchronized with the principal repayments. Fourth, it establishes credit enhancement measures. Vanke will pledge receivables from its project subsidiaries—Wuhan Wanyun Real Estate Co., Ltd. and Xixian New Area Kezhu Property Co., Ltd.—as collateral for the unpaid principal and interest of the bonds, committing to complete the necessary procedures for the credit enhancement within 60 working days. Disclosures show the outstanding balance of this bond is 1.1 billion yuan, with an issue date of January 22, 2021, and a term of 7 years. According to the issuance terms, if investors exercised their put option, the repayment date should have been January 22, 2026. The valid repurchase applications for this instance amounted to 10.32101 million bonds, with a repurchase price of 100 yuan per bond, totaling approximately 1.032 billion yuan. The approval of the "21 Vanke 02" plan provides a reference template for other debt extension negotiations currently underway. On the same day, Vanke also held bondholders' meetings for two other medium-term notes, "22 Vanke MTN004" and "22 Vanke MTN005," to discuss the latest extension proposals, which also included the 100,000 yuan fixed payout arrangement and the 40% down payment clause. However, this "model" solution also highlights the profound challenges Vanke confronts. Bai Wenxi indicated that, firstly, Vanke's asset side faces a risk of "bleeding." The pledged receivables from Wuhan Wanyun and Xixian Kezhu essentially represent an "advance draw" on the future sales collections of the project companies; if sales remain sluggish, the value of the collateral could depreciate. Secondly, the 40% down payment requires approximately 440 million yuan in cash, which is already a stretch for Vanke given its tight cash flow. In the second quarter of this year, Vanke also has 6.5 billion yuan in debt maturing. If each tranche requires a 40% down payment, the principal alone would necessitate 2.6 billion yuan, and when combined with interest and project payments, the company's book cash (about 80 billion yuan at the end of Q3, but mostly under supervision) would be rapidly depleted. If subsequent sales fall short of expectations, Vanke might be forced to continue rolling over debts with "extension + down payment," potentially being compelled to increase the down payment ratio with each round of extension until its asset packages are exhausted. Dangerously, if property prices continue to slump, the impairment gap on the principal after extension could pose a bad debt risk for financial institutions.
A Moment of Salvation The finalization of Vanke's bond extension plan followed a tortuous process of negotiation. On November 26, 2025, Vanke's initial proposal was a simple one-year extension of the principal, with no down payment and no interest, which was rejected for ignoring creditors' liquidity needs. In early December, Vanke revised the proposal to include credit enhancement, but it only vaguely promised a pledge of project company accounts receivable without specifying the targets or process, resulting in a mere 20.2% approval rate, far below the passing threshold. Just before December 22, a third version was introduced; while it added a 60 million yuan interest payment, attempting to soothe sentiment with a "small cash payment," it failed to address the core issue of vague credit enhancement, leading to the rejection of the key clauses again. These three failed versions ultimately forced the successful fourth version, which epitomizes the extensive communications between numerous creditors and related parties, showcasing a brutal shift from "credit-based extension" to "asset-backed debt." For creditors, however, an extension is not the endpoint but a postponement of risk; for Vanke, every instance of "cutting flesh" consumes its future operational flexibility, and it is far from being "in the clear." In the view of industry observers, while the approval of this extension plan buys Vanke valuable buffer time, the company still needs to achieve substantive progress in areas like sales recovery, asset disposal, and broadening financing channels to fundamentally alleviate its liquidity pressure. Bai Wenxi emphasized that looking ahead, Vanke's "race against time" depends on three key fronts: sales, financing, and policy. In the first half of 2026, Vanke needs to achieve a monthly average subscription amount exceeding 20 billion yuan to drive its operating cash flow positive, while simultaneously striving for capital increases from major shareholders and policy support, in order to have a hope of managing the impending peak in debt repayments. It is noteworthy that Vanke's current debt disputes are no longer just a matter of negotiation with creditors but have also advanced to the level of judicial enforcement. On January 14 alone, China Vanke Co., Ltd. and Changsha Vanke Enterprise Co., Ltd. were added as persons subject to enforcement in a new case, with the enforcement target being approximately 1.09 billion yuan, and the enforcing court being the Intermediate People's Court of Changsha City, Hunan Province. Furthermore, Vanke is involved in over ten instances of equity freezes, with the cumulative frozen amount exceeding 2 billion yuan. Notably, on December 30, 2025, and December 17, 2025, amounts of 250 million yuan and 570 million yuan were frozen, respectively. As of the time of writing, Vanke has not yet issued further announcements regarding an overall debt restructuring plan. The market will continue to monitor its subsequent debt repayment arrangements and operational strategy adjustments.
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