Chinese developer Vanke has proposed delaying repayment on a local RMB 2 billion ($283 million) bond for the first time, a surprise move that raises fresh concerns about Beijing’s willingness to support even the largest distressed developers.
Delaying the repayments suggest that despite some claims of a leveling out of China’s property market, the problems still persist. Usually, with domestic bonds these things can be worked out in a more discreet way than with offshore debt, but this large a developer having to delay repayments on this much money is striking.
There may be some credence now to the argument that China’s property market will just have to come to terms with the fact that valuations all around need to continue to drop until they hit a sustainable level. The issue here is that China’s property values are integral to so many aspects of the country’s economy, both in terms of personal and commercial assets.
Whatever the case, fundamentally the market is still not in good shape and this is another marker showing that not much has changed.