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<Research>Daiwa Expects CHINA VANKE to Delay Bond Repayment, Likely Impacting Future Sales/ Refinancing Outlook
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According to the documents submitted by CHINA VANKE (02202.HK) to the Shanghai Clearing House on Wednesday (26th), the company applied to delay the repayment of RMB2 billion medium-term notes due next month, Daiwa's research report indicated, considering this announcement came as a surprise to the market, as Shenzhen Metro has been providing liquidity support to Vanke. Furthermore, although Vanke can negotiate an extension of the repayment period, possibly avoiding cross-default, the market is likely to perceive this as a de facto default. The broker viewed this news may weaken Vanke's future sales and refinancing outlook, as stakeholders (such as regulators, creditors, homebuyers, and suppliers) lose confidence, plunging the company further into a vicious cycle. In view of Vanke's benchmark status in the industry and the potential systemic impact of its default, Daiwa did not rule out the possibility of Vanke receiving assistance. However, it believed a market-oriented solution like debt restructuring may ultimately be the outcome. It rated the stock as Underperform. AASTOCKS Financial News Website: www.aastocks.com |
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