China Vanke's Slow Debt Reduction, Negative Outlook Prompt Downgrade at S&P -- Market Talk

Dow Jones11-20

0423 GMT - China Vanke's debt-reduction progress is slower than S&P Global Ratings expected, it says as it lowers the developer's credit rating to 'B+' from 'BB-'. The negative outlook reflects S&P's expectation that contracted sales could fall further over the next 12 months, mainly due to a lack of new salable resources and China's prolonged property downturn. Vanke will need to dispose of noncore assets and maintain solid banking relationships to manage liquidity, it says. Liquidity could weaken if Vanke fails to execute asset disposals and debt refinancing. S&P reckons Vanke will prioritize liquidity preservation over deleveraging, making its target of reducing interest-bearing debt by CNY100 billion in 2024-2025 hard to attain. "In our view, the company's balance sheet will shrink due to asset sales at a discount and a significant reduction in land acquisitions." (fabiana.negrinochoa@wsj.com)

(END) Dow Jones Newswires

November 19, 2024 23:23 ET (04:23 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.

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