This article first appeared on GuruFocus .
China Vanke Co. ( CHVKY ), once the country's largest homebuilder, is preparing for a closely watched meeting in Shenzhen on Wednesday afternoon with several insurance firms and commercial banks, according to people familiar with the matter. The purpose of the discussions has not been disclosed, but the timing underscores the pressure building around the developer as insurers are among holders of its private debt, some of which has already seen delayed interest payments. Vanke did not immediately respond to requests for comment ahead of the meeting.
Alongside these talks, Vanke is still seeking bondholder approval to defer payment for one year on a 2 billion yuan bond that matured on Dec. 15. The company, which has roughly $50 billion in interest-bearing liabilities, revised its proposal after creditors rejected an initial plan, offering sweeter terms in an effort to win support. Bondholders have until Dec. 22 to vote, when the original grace period expires, and without an agreement, extension, or repayment by that date, creditors could potentially move to call a default, a scenario that was once viewed as unlikely.
Liquidity stress has been building at Vanke for at least two years, even as many investors long assumed authorities would help keep the developer afloat due to its largest shareholder being state-owned Shenzhen Metro Group. Shenzhen Metro previously provided more than 30 billion yuan in shareholder loans that helped Vanke avoid default, but confidence weakened after it signaled plans to tighten borrowing terms, sending the developer's securities into deeply distressed territory. Earlier this year, Vanke also negotiated with major domestic creditors, including private debt investors, to cut borrowing costs, temporarily skipping interest payments on some obligations before ultimately securing approval to lower interest rates on tens of billions of yuan in debt, steps that could shape how its refinancing efforts unfold from here.
