CHINA Vanke said it will receive 7.8 billion yuan (S$1.5 billion) of bank loans guaranteed by its units, an effort to “meet business operations needs”, as the cash-strained developer seeks to avoid a default.
Vanke subsidiary Shenzhen Yili Real Estate Development provided a guarantee for a 4.49 billion yuan loan, according to a company filing on Friday (May 24). Another unit, Shenzhen Zhongke Wanxin Industrial, issued a guarantee for a 3.29 billion yuan loan.
The Shenzhen-based company is also applying for a one billion yuan loan from banks, to be guaranteed by real estate assets held by a fully owned subsidiary in the city, according to the filing.
Once thought to be among the safer companies in China’s beleaguered property sector, state-backed Vanke is one of the largest developers hit by a slump in property sales and mounting debt. A potential payment default by Vanke could wreak havoc on investors’ and home-buyers’ confidence in the sector.
Vanke’s shares and bond prices have soared in recent days as it has sought to reassure the market with new bank credit lines. A slew of recent funding from Chinese banks has totalled nearly US$4 billion – including a 20 billion yuan syndicated loan from banks including China Merchants Bank. BLOOMBERG
