(Bloomberg) -- China Vanke Co., one of the country’s largest property developers, is facing a record deluge of debt coming due as worries grow about its liquidity with the property market stuck in a deep slump.
Vanke has about $4.9 billion in yuan- and dollar-denominated bonds maturing or facing redemption options in 2025, its highest annual amount ever, and the most for any Chinese developer this year, according to Bloomberg-compiled data. The obligations account for more than half of its outstanding public debt.
Once considered a bellwether of China’s property market, Vanke’s slumping bond prices indicate increasing investor alarm about its financial health. Over the past month, its 3.5% dollar bond due 2029 slid 16.3 cents to 37.91 cents as of midday Thursday, according to Bloomberg-compiled prices. Investors generally consider levels below 70 cents distressed.
Vanke told Bloomberg News that it will make all efforts possible to deal with its public debt obligations this year. The developer also said it will continue to raise funds, including through home sales, asset sales and exiting non-core businesses.
“Vanke needs to secure new financing to avoid defaults on its public debt,” said Yao Yu, founder of Shenzhen-based credit research company Ratingdog. However, the market may not have fully priced in the possibility of defaults, he added.
Because of its state backing through its largest shareholder, Shenzhen Metro Group Co., Vanke has long been seen as more insulated from the risk of default than some of its peers. But even Chinese regulators have signaled their concerns recently, asking domestic insurance companies to report their exposure to help assess how much support the company needs to avoid default.
China’s property crisis, now entering its fifth year, has taken a big toll on Vanke’s finances. In October, the company reported a third-quarter net loss of 8.1 billion yuan ($1.1 billion), bringing its combined losses for the first nine months of the year to 17.9 billion yuan.
Its interest-bearing liabilities totaled 327.6 billion yuan at the end of September, according to an exchange filing. Of those, more than a third carried maturities of less than a year.
The housing sector overall has shown little sign of improvement, with sales from the top 100 builders slumping 28.1% last year compared with a 16.5% drop in 2023.
“It’s unclear how long Vanke can hold out,” Yao said. The company’s reliance on collateral-based borrowing raises concerns about its ability to meet its debt obligations in the short term, he added.
--With assistance from Emma Dong.
(Updates with price moves in the third paragraph)
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