Chinese authorities are stepping in to stabilize operations at China Vanke Co. after growing liquidity concerns and questions surrounding its CEO’s whereabouts caused turmoil for its bonds and shares. Officials in Shenzhen, where Vanke is based, held a closed-door meeting to discuss the developer’s challenges, with plans to ensure the company’s stability. The Shenzhen government, which controls Vanke’s largest shareholder, a state-owned firm, has significant influence over the company.
During the meeting, the local government announced plans to bring in new auditors and financial advisors to assess Vanke’s balance sheet and property projects, aiming to pave the way for future actions. These discussions are preliminary and may change.
Vanke’s yuan bonds surged 20% or more on the news, but trading was halted. The company’s debt troubles come as it faces a mounting wall of repayments amid slumping home sales and widening losses, exacerbated by China’s real estate slowdown. The developer’s liquidity could reach a breaking point in 2025 without state intervention, analysts warn.
Despite the turmoil, Vanke’s government ties offer hope for a potential bailout. The company’s $4.9 billion in bonds maturing in 2025 is the largest debt repayment by any Chinese developer this year.