China Vanke Co. proposed delaying repayment on a local bond for the first time, a surprise move that raises fresh concerns about Beijing’s willingness to support even the largest distressed developers, reports Bloomberg. The builder is seeking to delay paying principal on a RMB 2 billion ($283 million) note due on Dec. 15, according to a filing to the Shanghai clearing house late Wednesday. Vanke will arrange a meeting with bond holders on Dec. 10 to discuss the proposal, the firm said.
“The extension is very surprising to the market,” Yao Yu, founder of Shenzhen-based credit rating startup RatingDog, adding support from Vanke’s largest state shareholder over the past year “has become suddenly meaningless.”
The mounting debt problems facing Vanke, long considered one of China’s healthier property firms, have become a bellwether for China’s stance on the real estate sector, which has been a drag on the economy for several years. Policymakers need to strike a delicate balance of trying to revive the moribound market stung by record defaults, without getting mired in rescuing individual firms.