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China Vanke Co. (Vanke) is said to be facing resistance from ICBC and CCB for a new HK $4.5bn ($575mn) syndicated offshore loan, according to sources. The banks want Vanke to provide sufficient collateral before signing off for the loan, to which Vanke has not consented. The sources added that without the collateral, the lenders would require the regulator’s clearance before proceeding with the funds. The third bank, Bank of China (BOC) has already approved its own HK$1.5bn ($191mn) portion of the loan.
In related news, Vanke was downgraded by Moody’s to HY status, to Ba1 from its earlier Baa3 rating. Its backed senior unsecured bonds were also downgraded to Ba2 from Ba1. The downgrade reflects Moody’s expectations that Vanke’s credit metrics, liquidity buffer and financial flexibility will weaken over next 12-18 months due to the expected weakening in sales and rising uncertainties over access to funding. As of September 2023, the company had RMB101bn ($14.1bn) of unrestricted cash, which covered 2.0x of its short-term debt. Vanke is still rated IG by both S&P and Fitch.
Vanke’s bonds traded stable with its 4.2% 2024s at 92.2 cents on the dollar.