Chinese Insurers Warn of Debt Risks at Property Giant Vanke

(Bloomberg) - Some of China’s largest insurers are sounding an alarm over the debt risks of China Vanke Co., according to people familiar with the matter, as shares and bonds of the major developer hit record lows on repayment concerns.

At least two Beijing-based insurers that farm out annuity investments told their external portfolio managers late last week to closely monitor Vanke’s credit risks, said the people, asking not to be identified discussing a private matter. One life insurer also told its pension managers to curb exposure, the people added.

Meanwhile, Vanke, China’s second-biggest developer by sales, has begun a new round of negotiations with several state insurers in recent days to extend maturities of some private borrowings, the people said. No agreement has been reached so far.

Vanke, one of the country’s few remaining investment-grade builders, is the latest to face close scrutiny from shareholders and creditors, following defaults by industry giants Country Garden Holdings Co. and China Evergrande Group. The developer’s shares and bonds slumped on Monday in a sign of renewed worries about its debt woes.

Vanke didn’t respond to a request for comment.

The builder’s shares closed down 7.1% in Hong Kong at their lowest level ever, and fell 4.7% in Shenzhen, the biggest drop since December 2022. Some of Vanke’s yuan bonds also hit their lowest levels, according to Bloomberg-compiled prices, while its 3.975% dollar bond due in 2027 fell by more than 6 cents on the dollar to 47.3 cents.

The builder, whose biggest shareholder is Shenzhen Metro Group Co., has faced concerns about its debt obligations since last year. China’s home sales slump accelerated this year, even after regulators stepped up efforts to rescue the beleaguered sector.

Vanke said Friday it plans to raise about 1.16 billion yuan ($161 million) in an infrastructure REIT that will list in Shenzhen.

By Bloomberg News


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