Vanke issues intensive late-night announcements! Related to the extension of two bonds

Vanke issued multiple major bond announcements on the evening of December 5, including seeking to extend two medium-term notes, waiving a redemption option on a company bond, and terminating cooperation with two rating agencies. This series of measures highlights the liquidity pressure and strategic contraction Vanke is currently facing. According to an announcement by the Shanghai Clearing House, Vanke plans to extend “22 Vanke MTN005” with a remaining balance of 3.7 billion yuan, originally set to mature on December 28. A week earlier, Vanke had just announced an extension review for the 2 billion yuan “22 Vanke MTN004”. The combined principal and interest for these two bonds reaches 5.871 billion yuan, putting repayment pressure front and center. Analysts point out that, according to regulations, each bond extension must obtain at least 90% creditor approval. The December 12 voting deadline for “22 Vanke MTN004” and the December 22 meeting of “22 Vanke MTN005” bondholders will be key moments testing Vanke's debt management abilities. On the same day, Vanke also decided to waive the redemption option for the “21 Vanke 02” bond, delaying the 1.1 billion yuan repayment pressure until the natural maturity date. While this decision can buy some buffer time for cash flow management, for Vanke, which has a cash-to-short-term-debt ratio of less than 1, it also underscores the reality of tight funds. Additionally, Vanke proactively terminated credit rating services from United Ratings and China Chengxin for its entity, affecting ratings for 12 bonds. Analysts believe this move not only reduces rating fees but also avoids market shocks brought by potential rating downgrades. ## Many Bonds Seeking Extension A December 5 evening announcement by Shanghai Clearing House indicated that Vanke will convene a meeting for holders of “22 Vanke MTN005” to discuss extension matters. This bond has a remaining balance of 3.7 billion yuan, an interest rate of 3%, and was originally due December 28, 2025. The meeting organizer is Bank of Communications and will be held on December 22. Last week, Vanke had already proposed an extension plan for “22 Vanke MTN004”, with a balance of 2 billion yuan, originally due December 15. A summary of proposals disclosed by Shanghai Clearing House shows that Vanke presented three extension options for creditors to choose from. > The first proposal, as initially put forward by Vanke, extends the principal repayment by 12 months to December 15, 2026. Interest accrued before the extension will also be deferred by 12 months and paid together with the principal, with no compound interest during this period. The coupon rate remains at 3% during the extension, and the new interest will be paid along with the principal. This means holders will not receive any cash back within the coming year. > > The second proposal calls for additional credit enhancement measures, including but not limited to full, irrevocable joint liability guarantees or collateral measures provided by Shenzhen Metro Group or other Shenzhen state-owned enterprises. Under this plan, interest accrued before the extension will be paid on the original interest payment date, December 15, 2025, while principal payment is deferred to December 15, 2026. The proposal also stipulates that Vanke must fully pay the principal and interest of this bond before repaying subsequent maturing principal on other bonds. > > The third proposal also requires credit enhancement, with principal deferred to December 15, 2026, and unpaid interest before the extension to be paid on December 15, 2025. > > Market sources reveal that the latter two proposals were put forward by creditors. The voting deadline for “22 Vanke MTN004” is December 12, with the bond maturity date on December 15. Holders say that if the vote fails, it will be very tight to re-organize voting, and Vanke may struggle to avoid default. Founder Securities analyst Li Qinghe said that after Vanke seeks an extension, Shen Tie’s support for Vanke will be more market-oriented, which could ease investor concerns to a certain extent. If the extension proceeds smoothly, it will help narrow the spread for Shenzhen Metro. Huayuan Securities analyst Liao Zhiming noted that currently, Vanke’s available cash can cover its outstanding bonds but cannot fully cover all interest-bearing debt principal maturing over the next year. Future debt repayment will still depend on external financing channels or the company’s own cash-generation capability. If negative events worsen the financing environment, Vanke’s existing bonds may shift from extension to substantial default. ## Waiving Redemption and Terminating Ratings On December 5, Vanke announced it was waiving the redemption option for “21 Vanke 02” bonds. This bond was issued on January 22, 2021, with a remaining balance of 1.1 billion yuan, a coupon rate of 3.98%, and a term of 7 years. Per the bond terms, Vanke could have exercised its redemption right at the end of the 5th year (January 22, 2026). Vanke said in the announcement that, based on actual company circumstances and the current market environment, it chose to waive the redemption right and the bond will continue through the 6th and 7th years. According to the prospectus, investors have a put option, allowing them to sell all or part of their holdings to Vanke at par during the registration period from December 9 to 15, or choose to continue holding. The payment date for these funds is January 22, 2026. Bo Wenxi, chief economist for China region at China Enterprise Capital Union, stated that if the redemption were exercised, Vanke would need to pay principal and interest in a lump sum, further straining the cash position of a firm with a short-term cash/debt ratio below 1. Waiving the redemption can defer this repayment pressure to the natural maturity date, providing a buffer for cash flow management. That same day, Vanke also announced the termination of its credit ratings by United Ratings and China Chengxin. As of May 30, 2025, both agencies had rated Vanke AAA with a stable outlook. Vanke sent letters to both agencies stating that, based on its own needs and the actual business situation, it has decided to terminate the entity credit rating service. United Ratings then stopped rating Vanke and 12 of its bonds, while China Chengxin stopped rating Vanke and “21 Vanke 02”, and will no longer update these ratings. Bo Wenxi pointed out that terminating the ratings can save millions in annual fees, and is a strategic adjustment under debt pressure. Proactively terminating ratings can help avoid further market shocks from possible downgrades and reduce negative sentiment transmission. Since the domestic exchange bond rules do not mandate continued ratings, Vanke’s current financing is mainly through bank loans and operating cash flow, and short-term financing capabilities will not be immediately impacted. Vanke stated in its announcement that these actions will not have major effects on the company’s operations, financial position, or debt-paying capability. Liu Shui, research director at China Index Academy, thinks that the suspension of rating services may cause the market to lack objective reference and increase uncertainty for investment decisions. Bo Wenxi, chief economist, believes Vanke’s “no redemption + stop ratings” move is not a signal of insolvency crisis, but rather a defensive “cash is king, winter survival” strategy. ## Continued Liquidity Pressure Behind Vanke’s series of moves lies ongoing liquidity stress. According to Zheshang Securities, as of Q3 2025, Vanke’s interest-bearing debt stands at 362.93 billion yuan, cash at 65.677 billion yuan, and the cash-to-short-term-debt ratio is under 1, making it hard to cover short-term debt from a static perspective. Financial reports show Vanke’s total operating revenue in the first three quarters of 2025 was 161.388 billion yuan, down 26.61% year-on-year; net profit attributable to shareholders was -28.237 billion yuan, with losses up 72.19% year-on-year. Fitch expects Vanke’s 2025 sales to fall 45% and 2026 by 30%. Guotai Junan Securities data indicates that as of November 13, Vanke had 13 domestic corporate bonds and medium-term notes outstanding totaling 20.316 billion yuan, plus two overseas USD bonds totaling USD 1.3 billion. Aside from the two notes seeking extension, Vanke faces another 10 billion yuan of domestic bonds maturing between April and July 2026. The support method of major shareholder Shenzhen Metro Group is also changing. Zheshang Securities analyst Du Jian noted that, from February to November this year, Shenzhen Metro had provided Vanke nearly 30 billion yuan in loans, but recently switched from credit loans to loans with collateral, reflecting a shift from “unlimited backstop expectation” to financial support with limits, terms, and conditions. On December 5, S&P placed Vanke’s credit rating on a negative watch, saying current financial commitments are not sustainable, and the company faces risks of default or distressed debt restructuring. On December 2, Fitch downgraded Vanke’s credit rating to “CCC-”, stating that without further shareholder support, the company may not be able to repay maturing debt. Risk Warning and Disclaimer The market has risks, and investment must be cautious. This article does not constitute personal investment advice, nor does it take into account the specific investment objectives, financial situation, or needs of individual users. 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