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Developer China Vanke claims Moody’s junk-level downgrade is manageable as shares and bonds gain on bailout reports
- The impact of Monday’s downgrade is ‘controllable’, the second-largest Chinese developer says
- Vanke shares rose more than 10 per cent to HK$6.30 on Tuesday on belief that commercial banks will raise up to US$11.1 billion to repay its debts
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Indebted developer China Vanke said it remains financially sound and can manage the impact of Monday’s credit-rating downgrade to junk-level status. The company’s shares and bonds both gained ground following weeks of losses amid reports of a state-backed bailout.
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International ratings agency Moody’s withdrew the state-backed developer’s “Baa3” issuer rating late on Monday, replacing it with a “Ba1” corporate family rating on concerns about the company’s liquidity.
The impact of the downgrade is “controllable”, Vanke, the second largest Chinese developer by sales, said in a written response to the Post. It added that “the company’s operation is normal” while its funding channels are stable and its refinancing progress is running “soundly”.
Sentiment from investors eased on market rumours that 12 commercial banks, including six state-owned lenders led by Industrial and Commercial Bank of China, are in talks to raise as much as 80 billion yuan (US$11.1 billion) in syndicated loans for China Vanke to repay its maturing bonds.
Vanke shares rose more than 10 per cent to HK$6.30 on Tuesday. The Hang Seng Mainland Properties Index, a gauge tracking 10 mainland home builders listed in Hong Kong, advanced 7.9 per cent.
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