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First it was Evergrande, then it was Country Garden, now China’s #2 property developer by sales volume is in trouble. On Monday, Vanke’s was downgraded to junk status by Moody’s.
Moody’s said on Monday it withdrew Vanke’s ‘Baa3’ rating which is the lowest of Moody’s investment grade ratings, and assigned ‘Ba1’ corporate family rating (CFR). It also said all of Vanke’s ratings would be on “review for downgrade”.
Vanke is one of the few remaining Chinese developers with investment-grade ratings. If another major rating agency such as S&P or Fitch follows suit, Vanke’s dollar bonds would face the prospect of being dumped out of some of the world’s most important investment indexes.
In a statement to Reuters, Vanke said the “company’s current operation and refinancing are normal and financing channels are stable”. It also said the impact of a ratings downgrade on its financing activities was “controllable”.
Controllable in this case seems to mean on the verge of default. However, Vanke has an advantage that other Chinese developers did not have. It’s partly government owned. And that means that the government is getting involved in trying to rescue it.
China Vanke Co.
