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China's Vanke In Deep Debt Spiral
28 Nov
Summary
- Vanke faces a race to repay 13.4bn yuan in debts due next June.
- Company expects a 45bn yuan loss for 2024, a sharp drop from 2023 profit.
- New home sales in China dropped at their fastest monthly pace in October.
Vanke, formerly China's largest homebuilder, is now at the center of a renewed property crisis, having entered a fresh debt spiral. Its bonds saw significant drops, causing trading suspensions and a slump in share value. The company is under pressure to secure funds for 13.4bn yuan in debts due in June, underscoring the fragile state of China's property market.
The firm's difficulties are a stark indicator of wider sector-wide distress. Despite Beijing's attempts to stimulate growth through relaxed buying curbs and lower mortgage rates, demand remains weak, evidenced by October's steepest monthly decline in new home sales. Vanke itself has reported temporary liquidity issues, forecasting a 45bn yuan loss for 2024.
Analysts predict further downturns in China's property sector for at least two more years, with projections of continued drops in sales and construction. This ongoing crisis follows the delisting of another property giant, Evergrande, in August, further casting a shadow over the nation's economic growth and housing market stability.
