China mulls 50 bln yuan funding plan to help Vanke repay debt

Chinese authorities are working on a proposal to help China Vanke (2202) plug a funding gap of about 50 billion yuan (HK$53.28 billion) this year, according to people familiar with the matter, highlighting the government support for the distressed developer.

Under the plan, regulators would allocate 20 billion yuan of special local government bond quota for the purchase of unsold properties and vacant land from Vanke, said the people, asking not to be identified discussing private information. The money would enable the Shenzhen-based developer to pay public and private debt due this year, the people added.

Vanke and its affiliates would also be allowed to tap other financing sources including new bond sales and bank loans for debt payments, the people said, adding that the details of the plan could still change. It couldn’t be determined if Vanke has started any work on specific bond issuance.

Vanke’s stock rose over 15 percent in the afternoon session.

BLOOMBERG AND STAFF REPORTER