China Vanke's Debt Woes Spark Downgrade From Fitch Ratings
By Fabiana Negrin Ochoa
China Vanke's debt woes have sparked a downgrade from Fitch Ratings over heightened risk of default by the developer, which is seen as a bellwether for the Chinese property sector.
The move comes as pressure mounts on the embattled homebuilder over a 2 billion yuan bond payment that came due on Monday, equivalent to about $283.9 million.
Vanke, one of China's largest real-estate companies, earlier this week tried but failed to secure bondholder support for an extension.
Fitch's downgrade follows Vanke's entry into a grace period of five working days for the repayment of principal and interest on the onshore bond, the rating company said, adding that Vanke expects to hold another bondholders' meeting during the grace period.
Liquidity is tight and Vanke is facing about 6 billion yuan of capital-market debt maturing this month. An additional 12 billion yuan is due next year, according to Fitch.
"We believe the company may be unable to repay these maturities without shareholder support," Fitch said in a report on Wednesday.
Vanke's largest shareholder, Shenzhen Metro Group Co., provided about 29 billion yuan in loans from January to November, supporting debt repayment, it noted.
The developer's available cash was down to 60 billion yuan by end-September, Fitch estimates, most of which comprises presale deposits. Even after including asset-sale proceeds, the rating company expects Vanke's free cash flow to remain negative in 2025 and 2026.
Fitch cut the Chinese homebuilder's long-term foreign- and local-currency issuer default ratings to 'C' from 'CCC-'. It also downgraded ratings on wholly owned subsidiary Vanke Real Estate (Hong Kong).
Last month, S&P Global Ratings also downgraded China Vanke, citing heightened risk of a distressed restructuring within the next six months as the developer stares down a sizable bond maturity wall.
Write to Fabiana Negrin Ochoa at fabiana.negrinochoa@wsj.com
(END) Dow Jones Newswires
December 17, 2025 20:28 ET (01:28 GMT)
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