China’s credit market is displaying signs of improvement as two prominent property developers and a large car dealer have unveiled their plans for repaying maturing debt. The encouraging updates from these borrowers, particularly amidst China’s unprecedented property debt crisis, provide relief to investors. This positive news coincides with a five-month winning streak for a key Bloomberg gauge of Chinese junk dollar bonds, which is predominantly influenced by developers.
One of the major players, China Vanke Co., shared its repayment plans for three offshore bonds totaling about $1.4 billion in combined principal. During the briefing to creditors, China Vanke Co. outlined its strategy, intending to utilize a combination of cash reserves and funds generated from onshore projects. The company plans to repay a $630 million dollar note due in March, with a 1.4 billion yuan ($195 million) dim sum bond due in May and another $600 million dollar bond due in June to be settled through offshore bank loans.
Similarly, rival Longfor Group Holdings Ltd., the country’s ninth-largest builder, announced its approach to meet refinancing needs. Although Longfor has no dollar bonds maturing this year, it plans to repay an HK$8 billion ($1 billion) syndicated loan due in January 2025 in the second half of this year. Additionally, it aims to gradually pay off another HK$8 billion syndicated loan due in December 2025 in the first half of the next year. Longfor assured creditors that it anticipates selling new bonds guaranteed by state-owned China Bond Insurance, securing more bank loans, and taking on additional bank loans backed by its commercial properties annually.
In a positive development, China Grand Automotive Services Group Co. declared its commitment to fully repay its dollar bonds maturing this month. This announcement alleviates earlier concerns and dismisses any speculation about potential backup plans.
The recent updates from these major borrowers bring a sense of relief to investors, especially in light of the challenges faced in China’s credit market over the past year. The willingness of companies to engage with investors and discuss their debt plans reflects a better financing situation compared to their peers. It is noteworthy that such communication had become less frequent in the second half of the previous year amid the worsening housing slump and heightened financial stress among builders.
