(Bloomberg) -- China’s banking regulator told the country’s biggest insurers to report their financial exposure to China Vanke Co., in a bid to assess how much support the developer needs to avoid default, according to people familiar with the matter.
The reviews began a few weeks ago and include holdings of bonds and private debt issued by China’s fourth biggest developer by sales, the people said.
Two insurers that farm out annuity investments also told their external portfolio managers to check on exposure earlier this month, the people said. The reports also include information on underlying assets used to secure the debt, the people added.
The checks signal continued worries over Vanke, one of the country’s few surviving big developers, as China’s years-long property crisis drags on. The insurers conducted similar checks in March as fears grew over Vanke’s debt risks. Such reviews help regulators weigh the impact of holdings and facilitate decisions on financial support.
Separately, Vanke executives have visited several insurers in the past few weeks, urging them not to exercise put options on some private debt that will soon become open to them, the people said. That would help Vanke prioritize bond payments and avoid a public default at a time when its liquidity is tight, the people added.
When asked about talks with insurers, Vanke said in a written reply that the news isn’t true. The National Financial Regulatory Administration, which oversees banks and insurers, didn’t immediately reply to a request for comment.
Vanke’s dollar bond due May 2025 fell 2.5 cents to be indicated at 87.5 cents — the biggest daily drop in three months — after Bloomberg reported the news, according to two traders. Its 2027 note fell 3.5 cents to 50.5 cents, the traders added, marking the largest decline since Oct. 8.
China’s real estate slump remains a major concern for the government. Top officials led by President Xi Jinping last week vowed to stabilize the property market next year, and a Housing Ministry official reiterated the pledge on Saturday.
The country’s home-price declines eased for a third month in November, suggesting values are beginning to stabilize as policymakers step up efforts to ease the property downturn.
--With assistance from Emma Dong and Zhang Dingmin.
(add bond price changes following the story)
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