How Vanke Lost Support From Key State-Owned Shareholder
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China Vanke, the last big survivor of the country’s yearslong property crunch, sent investors an innocuous-looking announcement about a $3.1 billion loan agreement with a state-owned shareholder. But the Nov. 2 statement contained a twist: Shenzhen Metro, which had given unwavering support to the developer for nearly two years, now set a cap on any further financing. It also demanded that Vanke stump up collateral for its loans — including for the $2.8 billion already drawn down.
The move, which sent a signal that state officials were finally losing patience with Vanke, set off a chain reaction that ultimately pushed the company to ask for more time to pay back some of its debt. Bankers and fund managers are now rushing to weigh the damage of what could become one of the biggest corporate restructurings in China’s history, involving over $50 billion of outstanding debt — including more than $7 billion held by lenders and bond investors overseas.
Read Bloomberg’s exclusive account of how Vanke lost support from its government-owned shareholder.