(Yicai) Jan. 28 -- China Vanke's shares rose after the property developer avoided an immediate debt default as creditors unanimously approved extensions for two bonds that matured last month and its largest shareholder agreed to provide another loan to cover imminent principal and interest payments. Its bonds also gained.

Vanke [SHE: 000002] ended 2.3 percent higher at CNY4.86 (70 US cents) per share in Shenzhen today, while its Hong Kong-listed stock [HKG: 2202] jumped 3.3 percent to close at HKD3.73 (48 US cents). Its bonds 21 Vanke 04, 21 Vanke 06, 22 Vanke 02, 22 Vanke 04, and 22 Vanke 06 added 10.6 percent, 7.3 percent, 9.9 percent, 8.6 percent, and 4.2 percent, respectively.

Creditors voted unanimously in favor of Vanke's latest proposals to roll over 22 Vanke MTN004 and 22 Vanke MTN005, with a combined principal of CNY5.7 billion (USD820 million), according to two separate notices published on the website of the Shanghai Clearing House yesterday by the trustees of the two medium-term notes.

22 Vanke MTN004 and 22 Vanke MTN005 fell due on Dec. 15 and Dec. 28. Creditors did not approve Vanke’s initial extension proposals but did agree to extend the grace periods for the bonds by one month each, giving the Shenzhen-based builder extra time to come up with a more acceptable plan.

Under the approved proposals, Vanke will first pay CNY100,000 (USD14,400) of principal to the account of every creditor that voted in favor. Then on Jan. 28 the firm will pay 40 percent of the remaining principal and interest due, while the other 60 percent will be extended for one year. During the extension period the coupon rate will remain at 3 percent, and any additional interest accrued will be repaid with the principal upon maturity.

Based on the plan, Vanke is required to pay a total of roughly CNY2.5 billion in principal and interest to the creditors of the two notes on Jan. 28. Add to that the more than CNY400 million (USD57.6 million) initial payment for its 21 Vanke 02 bond -- due on Jan. 30 under extension terms approved earlier this month -- and the company needs to raise at least CNY2.9 billion this week to meet these obligations.

This is no small sum for the embattled developer, but it can count on its largest shareholder, Shenzhen Metro Group, which has again extended the firm a lifeline. Vanke announced in a separate statement yesterday that it has secured a loan of up to CNY 2.4 billion (USD 340 million) from Shenzhen Metro at 2.34 percent, specifically for repaying the principal and interest on its publicly issued debts.

Even though Vanke has avoided debt default this time, the company is still under intense pressure. According to statistics from a third-party institution, Vanke has 15 outstanding bonds, worth a total of about CNY29.6 billion (USD4.3 billion). Seven of them, with a combined value of about CNY11.3 billion, are set to mature by the end of July.

Vanke's core business is also under pressure. The firm had a net loss of CNY28 billion for the first three quarters of last year. Data from China Real Estate Corporation showed that its contracted sales amounted to CNY133.9 billion (USD19.3 billion) in 2025, down 46 percent annually. With its sales continuing to slump, Vanke may need to keep seeking debt extensions going forward.

As real estate prices have plunged, many projects have become insolvent or failed to generate decent returns, said Liu Shui, research director at the China Index Academy. Whether Vanke can provide sufficient effective assets as credit enhancement guarantees for its debt extensions will be a major challenge for the company, he added.

Editors: Tang Shihua, Futura Costaglione