The recovery rate for China Vanke's (2202) US dollar bonds is estimated to be only around 10.1 percent under the base scenario, while it may drop as low as 0.9 percent in the worst situation, taking into account the difficulty of enforcing onshore assets, Barclays said on Wednesday.
Beyond other factors, the decline of recovery rate estimates reflected the risk that this developer's offshore bonds may be subordinated to its onshore interest-free debts, the bank said in a report.
Barclays noted that if these onshore loans rank senior to offshore creditors, the remaining assets available for distribution to bondholders will be severely constrained.
Vanke's US dollar bond, which matured in 2027, is reportedly worth 20 US cents (HK$1.55) per US dollar, while that due in 2029 represented a par value of about 19 US cents per US dollar.
Last month, Vanke got the approval to extend the grace period of two onshore bonds that matured in December 2025, while bondholders rejected its proposal to delay repayments.
