After Evergrande and Country Garden, Vanke is the latest real estate conglomerate caught up in the crisis in China. The rating agency Moody’s lowered the promoter’s rating by one notch on Tuesday March 12, as financing difficulties loom for the company.
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It is the second largest Chinese developer which is today placed “ under surveillance » by the American rating agency Moody’s. Like EvergrandeVanke is still considered today as “ too big to fail “, a company too powerful to collapse and therefore not likely to take down the entire real estate house of cards with it, reports our correspondent in Beijing, Stéphane Lagarde.
Financial risks will increase
This concept had been put forward in particular with regard to the American bank Lehman Brothersbut that did not prevent it from triggering the 2008 financial crisis.
However, by lowering the strength rating of the Shenzhen promoter to “ speculative », Moody’s suggests that financial risks could increase in the next 12 to 18 months for Vanke, due to difficulties in accessing financing.
In a context of real estate crisis and falling prices, the Chinese have stopped investing in stone, against a backdrop of economic slowdown. Investors are wary and have dumped the developer’s stocks and bonds in recent weeks.
Shudders and commotion
Moody’s, which estimates that Chiuna Vanke’s contract sales fell by around 40% in the first two months of the year, does not rule out another downward revision. Shivers and commotion among financial institutions and authorities: at least three insurance companies based in Beijing sent their managers to Vanke headquarters in Shenzhen this week, according to the Bloomberg agency. This is to negotiate debt repayment plans in coordination with local governments.
In a statement, Vanke’s management said on Friday that it had deposited the funds necessary to reimburse $630 million.
After Evergrande and Country Garden, it is the last big name in real estate in China to be caught up in the crisis, reports AFP. This sector, which has experienced two decades of meteoric growth with the rise in the population’s standard of living, has long represented in the broad sense more than a quarter of China’s GDP.
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