China’s real estate giant Vanke’s first debt extension plan failed to garner enough support from bondholders, leading to speculation about the company’s default. Vanke had hoped to extend the deadline for repayment of a domestic bond worth 2 billion USD due on December 15.
In addition, Vanke also applied for an extension for a 37 billion RMB domestic bond (due on December 28) and a USD bond (due in November 2027).
According to public documents submitted to the National Association of Financial Market Institutional Investors (NAFII) in the U.S., all three proposals did not meet the required support threshold of over 90%, intensifying concerns about the default of China’s largest residential property developer.
Initially, Vanke’s proposal allowed for a 12-month extension of the repayment period for principal and interest without making any advance or installment payments. The other two proposals required the developer to enhance credit rating measures and pay interest on time, receiving support from investors holding 83.4% and 18.95% of the remaining bond balances, respectively.
Seeking debt extension is a critical strategy for Vanke to alleviate liquidity pressure. Without a debt extension agreement, Vanke faces imminent default risk if it fails to fully repay investors by next Monday (the 15th), despite having a five-day grace period, according to the bond prospectus.
Vanke is one of the few large developers that have survived the extended downturn in China’s real estate market in recent years. Market observers warn that a collapse of Vanke could further drag down the Chinese economy and exacerbate the gloom in the real estate sector over the long term.
In recent weeks, Vanke’s debt crisis has worsened, with its largest state-owned shareholder, Shenzhen Metro Group Co., reversing its previous full support stance in November and tightening financing conditions. Consequently, both Vanke’s securities and bond prices plummeted.
With the setback of the debt extension plans, some of Vanke’s bond prices have dropped to historic lows. It is estimated that Vanke’s debt restructuring scale amounts to 364.3 billion RMB, potentially surpassing the default scale of private counterparts such as Evergrande and Country Garden, including interest-bearing debts.
Li Huan, co-founder of Forest Capital Hong Kong Ltd, told Bloomberg, “Vanke is extending bond maturities one by one just to buy time, ultimately needing to implement a comprehensive restructuring plan.”
He further stated that prolonging bond maturities is a waste of time as it does not address the fundamental issues and may lead to further market volatility. “Ultimately, a comprehensive reorganization is inevitable,” he said.
Last Sunday, officials in Shenzhen held a meeting with bond investors, appealing for understanding regarding Vanke’s predicament. However, they added that there is little room for improvement in Vanke’s current debt extension plan.
A default by Vanke would make potential homebuyers more hesitant to invest in real estate, as new development projects may never be completed. Fitch Ratings also warned that the financing environment for Chinese real estate developers in 2026 will be even more severe.
Moreover, the Vanke situation could trigger a chain reaction in the Chinese economy and financial system, dragging down the banking sector and further stifling consumption and investment. UBS’s latest report in November 2025 indicates that China’s real estate downturn cycle will persist until mid-2027.