Low-end chip dumping probed

Staff reporter and agencies

Embattled property developer China Vanke's (2202) chief executive Zhu Jiusheng has been taken away, a Chinese newspaper reports.

Police took away Zhu on Wednesday, The Economic Observer quoted sources as saying.

Zhu, who joined Vanke in 2012, is also the non-executive director of E-House (China) Enterprise (2048), according to Vanke's 2023 annual report.

He was previously a non-executive director of Huishang Bank Corporation (3698) and independent non-executive director at Lvgem China Real Estate Investment.

The news about Zhu came amid a deepening Vanke bond sell-off as worries grow about its mountain of debt coming due and a property crisis that remains entrenched despite government rescue efforts.

Vanke's 3.15 percent US dollar note due 2025 was down 18.5 cents to 57.7 cents so far this week as of yesterday in Hong Kong, and is poised for its largest weekly drop since its issuance, according to Bloomberg-compiled data. Trading was halted on five of its yuan bonds yesterday after prices on each fell 20 percent.

Vanke has US$4.9 billion (HK$38.2 billion) in yuan- and US dollar-denominated bonds maturing or facing redemption options in 2025, its highest annual amount ever, and the most for any Chinese developer this year.

The obligations account for more than half of its outstanding public debt.

"Bondholders are concerned about Vanke's ability to repay its upcoming onshore bond and make coupon payments in January and February," said Zerlina Zeng, head of Asian strategy at Creditsights Singapore.

Vanke has around 9 billion yuan (HK$9.56 billion) of onshore notes maturing in the first quarter of the year, with the first payment on January 27.

Vanke's challenges highlight the continuing slump in China's property market. Two other developers - Sunac China (1918) and Shimao (0813) - recently received new liquidation petitions after surviving previous wind-up risks.

The country's housing sales remain sluggish, despite stimulus measures, with sales from the top 100 builders falling 28.1 percent last year compared with a 16.5 percent drop in 2023.

Vanke told Bloomberg News earlier that it will make all efforts possible to deal with its public debt obligations this year.

As of the end of September Vanke's interest-bearing liabilities totaled 327.6 billion yuan, according to an exchange filing. Of those, more than a third carried maturities of less than a year.

Because of its state backing through its largest shareholder, Shenzhen Metro Group, Vanke has long been seen as more insulated from the risk of default than some of its peers.

In 2023, following another dollar-bond plunge, Shenzhen Metro told financial firms that it had no plans to cut its stake in the developer and was preparing to purchase bonds.

Recently, Chinese regulators have signaled their concerns about Vanke, asking domestic insurance companies to report their exposure to help assess how much support the company needs to avoid default.

In a worst-case scenario where Vanke defaulted, concerns could spread to other areas.