Vanke to Pay Approximately 2.9 Billion Yuan in Debt Repayments This Week

Proposals to adjust the principal and interest repayment arrangements for two medium-term notes issued by Vanke have been approved. Combined with the previously approved adjustments for corporate bond repayments, this signifies that the company will pay a total of approximately 2.9 billion yuan this week to secure more time for comprehensively exploring a path to resolve its overall debt.

According to calculations based on public documents, under the latest repayment plan, Vanke will successively pay 40% of the principal and accrued interest in cash this week for three bonds: "21 Vanke 02," "22 Vanke MTN004," and "22 Vanke MTN005."

This represents the largest single debt repayment by Vanke since it first proposed extensions last November.

Furthermore, China Vanke Co., Ltd. announced on the evening of January 27 that its largest shareholder, Shenzhen Metro Group, will provide a loan of up to 2.36 billion yuan.

The loan is designated for repaying the principal and interest of bonds issued by the company on the public market, with a term of 36 months.

Although the specific bond names were not explicitly stated in the announcement, the scale of the loan from Shenzhen Metro Group is similar to the amount required for Vanke's current principal and interest payments.

If all proceeds smoothly, support from the state-owned shareholder will help Vanke avoid a default on its public bonds at least until April, thereby buying time to formulate a comprehensive debt solution.

According to sources familiar with the matter, Vanke recently received official instructions requiring the company to quickly assess its debt situation and promptly develop a restructuring plan.

"This new shareholder loan reflects the Shenzhen municipal government's continued support for Vanke and, to some extent, addresses the funding needed for the immediate repayment of the 40% principal," said Jeff Zhang, an analyst at Morningstar.

"Given that Vanke has over 7 billion yuan in bonds maturing in the first half of this year, we expect its major shareholder, Shenzhen Metro Group, will continue to inject liquidity, thereby reducing the risk of default."

According to compiled data, Vanke's next onshore bond maturity is scheduled for April 23.