SOME of China’s largest insurers are sounding an alarm over the debt risks of China Vanke, according to people familiar with the matter, as shares and bonds of the major developer hit record lows on repayment concerns.
At least two Beijing-based insurers that farmed out annuity investments late last week told their external portfolio managers to closely monitor Vanke’s credit risks, said the people, asking not to be identified discussing a private matter. One life insurer also told its pension managers to curb exposure, said the people.
Meanwhile, Vanke, China’s second-biggest developer by sales, has begun a new round of negotiations with several state insurers in recent days to extend maturities of some private borrowings, said the people. No agreement has been reached so far, they added.
Vanke, one of the country’s few remaining investment-grade builders, is the latest to face close scrutiny from investors and creditors, following defaults by industry giants Country Garden Holdings Co. and China Evergrande Group. The developer’s shares and bonds slumped on Monday in a sign of renewed worries about its debt woes.
The builder, whose biggest shareholder is Shenzhen Metro Group, has faced concerns about its debt obligations since last year. China’s home sales slump accelerated this year, even after regulators stepped up efforts to rescue the beleaguered sector.
Vanke said Friday it plans to raise about US$161 million in an infrastructure Reit that will list in Shenzhen. BLOOMBERG
