**China’s Property Giant Vanke Faces New Financial Crisis**
China’s once “top student” in the real estate sector, Vanke, is now facing a new round of crisis as its self-sustaining ability falters, and external financial support dries up.
On Thursday (27th), Vanke hit new lows in both the A-share and Hong Kong stock markets, while several of its bonds in the debt market plummeted over 30%, leading to trading halts. Reports from the market indicate that the central government, banks, and major shareholder Shenzhen Metro are considering halting financial support, pushing Vanke towards a market-oriented bankruptcy restructuring. Analysts believe that Vanke’s debt restructuring may have a greater impact on the fragile Chinese market compared to defaults by private enterprises such as Evergrande and Country Garden.
Vanke’s stocks and bonds both experienced declines on Thursday (November 27). Vanke’s A-shares fell by 7.13%, hitting a new low since 2015, while its Hong Kong stocks dropped by 7.73%, reaching a record low since its listing, with a total decline of over 32% so far this year.
According to data from Duration Finance, Vanke’s offshore US dollar bonds due in November 2027 fell to $0.231 per dollar, lower than around $0.40 on Wednesday and significantly below $0.554 on Tuesday. Meanwhile, the 100 yuan face value bonds due in March 2027 plummeted to 40 yuan, far below the 85 yuan price on Monday.
The decline in Vanke’s stocks and bonds triggered a 2.1% drop in the Hang Seng China Real Estate Index on Thursday morning. Shimao Group saw a 4.8% decrease, Longfor Group dropped by 2.1%, and Agile Group fell by 1.3%.
In a statement on Wednesday, Vanke mentioned seeking approval from bondholders to delay the redemption of 2 billion yuan (280 million USD) onshore bonds due on December 15th.
Vanke’s request to postpone the repayment of onshore debts highlights the ongoing cash flow uncertainties faced by Chinese real estate developers, raising further questions about the continued downturn in the real estate market.
According to a report by The Wall Street Journal, Morningstar analyst Jeff Zhang stated that Vanke’s proposal for debt extension reflects the company’s persistent liquidity crisis, severely impacting its repayment capabilities. If the negotiations fail, investors’ sentiment in the Chinese real estate sector could deteriorate significantly since the market had not anticipated Vanke defaulting.
Earlier this month, S&P Global Ratings downgraded Vanke’s credit rating from B- to a lower-tier CCC, citing the company’s seemingly unsustainable financial commitments.
Vanke currently holds interest-bearing debts totaling 364.3 billion yuan. In addition, it has a 3.7 billion yuan bond due on December 28, with another US dollar bond due in November 2027.
Vanke’s bond market decline began on the 25th when prices of several bonds maturing in the second half of 2026 and 2027 dropped by over 10%. On the 26th, multiple bonds ceased trading due to price falls exceeding 20%, while on the 27th, more bonds halted trading after plummeting over 30%.
Market reports suggest that Vanke’s recent stock and bond declines are likely due to indications that banks, the central government, and local authorities are considering abandoning rescue efforts.
Bloomberg reported on Thursday that at least two large local banks rejected Vanke’s attempts to secure short-term loans to allay default concerns, leading to a sharp decline in the company’s bond prices this week.
Vanke has been in negotiations with multiple banks to obtain short-term loans to help repay two bonds totaling 5.7 billion yuan (approximately 805 million USD) due next month.
China’s ongoing crisis, lasting for four years, has resulted in defaults totaling around 130 billion USD, severely denting consumer confidence. Vanke’s fate could serve as a key indicator of Beijing’s willingness to support the hard-hit real estate sector.
In early November, financial media Octus reported that Beijing had issued preliminary instructions to the Shenzhen government, suggesting a “market-oriented” approach to handling Vanke’s debt issues. Vanke’s headquarters is located in Shenzhen. According to sources cited by Octus, “market-oriented” is a euphemism for debt restructuring.
Two individuals informed Reuters that the state-owned China International Capital Corporation (CICC) has been tasked with evaluating Vanke’s debts. One source mentioned that several weeks ago, CICC submitted an internal report to the central government, which included debt restructuring options.
In the latter half of 2024, the Chinese government introduced a series of measures to support the market and aimed to stabilize the property market, but with little success. This year, there have been no significant new stimulus measures, and recently, banks have released a large number of “direct supply” houses, putting pressure on the prices of second-hand properties. Moreover, central and local state-owned assets platforms have followed the banks in significantly listing their real estate properties for sale, signaling a shift towards market-oriented bankruptcy for Vanke in what appears to be a rescue effort.
Bloomberg reported on Thursday that Leonard Law, a senior credit analyst at Lucror Analytics Pte, mentioned, “the latest proposal for the domestic debt extension indicates that the funding channel from the Shenzhen municipal government has indeed closed, showing that the Shenzhen government is no longer willing or able to guarantee Vanke’s debts.”
On November 2, 2025, Vanke announced that it had signed a “Shareholder Loan and Asset Guarantee Framework Agreement” with its largest shareholder, Shenzhen Metro Group. The agreement specified the maximum amount Vanke could borrow from its major shareholder and the terms of borrowing and repayment, while also increasing the collateral requirements for Vanke’s loans.
Earlier this month, it was stated that by June 30, 2026, Vanke could borrow no more than 22 billion yuan from Shenzhen Metro Group, with 2.29 billion yuan of the quota still available.
This indicates that Shenzhen Metro Group will no longer provide “unlimited support” to Vanke, and all future dealings will be conducted in accordance with laws and regulations, marking a significant and explicit shift.
Previously, Shenzhen Metro Group extended approximately 20 billion yuan in loans to Vanke, utilizing its own credit to help Vanke secure loans from banks and other channels.
During Vanke’s first extraordinary shareholders meeting held on November 20, a deputy CEO and CFO of Vanke Group mentioned that some of the funds from Shenzhen Metro (to aid Vanke) come from banks, while some come from the State-owned Assets Supervision and Administration Commission.
A WeChat article by “Xiaowu Sees Da Wu” analyzed that this is also why Shenzhen Metro Group cannot provide “unlimited support.” Should banks or other institutions demand higher collateral requirements from Shenzhen Metro Group for loans, the financially constrained group will have to make corresponding demands to Vanke.
Vanke’s issues extend beyond debt and into significant sales declines within a sluggish Chinese real estate market, rendering it unable to self-sustain.
Vanke’s third-quarter report for 2025 showed a revenue of 161.39 billion yuan, a 26.6% year-on-year decline, and a net loss attributable to the parent company of 28.02 billion yuan, marking an 83% year-on-year decrease, with the decline widening from the first half of the year.
According to 21st Century Business Herald, Vanke’s total sales from January to October of this year amounted to 115.28 billion yuan, averaging around 11.53 billion yuan per month, nearly halving compared to the approximately 20 billion yuan monthly sales of 2024.
S&P Global Ratings estimates Vanke’s contracted sales in 2026 could further decline to around 103 billion yuan.
In the first half of this year, Vanke’s total new and refinancing financing amounted to 24.9 billion yuan, compared to 94.8 billion yuan for the entire previous year, indicating a further drop in Vanke’s financing capability.
Where will Vanke go from here? According to Morgan Stanley analysts quoted by Reuters on Thursday, almost all Chinese real estate developers seeking bond repayment extensions over the past four years have ultimately defaulted and gone through debt restructuring. They added that “Vanke is likely to take a similar path,” and that “its survival depends entirely on the continued liquidity support from Shenzhen Metro.”
The real estate industry was a key driver of China’s economic growth, but has been in a prolonged slowdown for several years, with many major developers facing liquidity crises and debt defaults. While Vanke is among the few real estate firms yet to default, often referred to as the “top student” in the property market, its potential collapse could have a more significant impact on the already fragile market compared to defaults by private enterprises like Evergrande and Country Garden.