Vanke Averts Default as Bondholders Approve Longer Grace Period

Core Viewpoint - China Vanke Co. has received last-minute support from creditors to extend a bond grace period, helping it avoid default for now, amidst ongoing challenges in the real estate sector [1][2]. Group 1: Bond and Creditors - Holders of Vanke's 2 billion yuan ($284 million) note voted to extend the grace period to January 28, after the company failed to pay by the December 15 maturity date [2]. - A proposal to defer principal payment for 12 months did not pass, with only 20.2% of creditors voting in favor, falling short of the required 90% [3]. Group 2: Company Financials and Industry Context - Vanke is the last major Chinese real estate firm to avoid default amid a multi-year property crisis, with $50 billion in interest-bearing liabilities [4]. - The company has approximately $160 billion in assets and over 125,000 employees, indicating that a restructuring would be one of the largest in China [5]. - The property sector's challenges began in 2020 with the introduction of the "three red lines" policy aimed at reducing excessive leverage among developers [6]. Group 3: Broader Industry Implications - A potential restructuring or default at Vanke could signify a new phase in the ongoing property crisis, which has already seen $130 billion in defaults and restructurings among other developers [4][6]. - Many indebted developers have been navigating complex restructurings for years, with eight of China's ten most indebted developers having largely completed the offshore restructuring process [7].