Fitch downgrades China Vanke

Fitch Ratings said it downgraded China Vanke Co., Ltd.'s long-term foreign-currency issuer default rating and the senior unsecured rating and rating on the outstanding senior notes of China Vanke's wholly owned subsidiary, Vanke Real Estate (Hong Kong) Co. Ltd., to BBB from BBB+.

“The downgrade reflects Fitch's expectation that leverage (defined as net debt/net property assets) will stay above 35% - its previous negative rating sensitivity- in the medium term. China Vanke's recent sales performance was weaker than expected, which could dampen cash generation and its deleveraging effort. It is also reflected in Fitch's recently lowered forecast for new-home sales in China in 2023,” the agency said in a press release.

The agency recently said it sees “China's full-year new-home sales to a fall of 10%-15% from a 0%-5% decline. We also lowered our forecast for Vanke's full-year 2023 total contracted sales to a 10% drop to CNY 375 billion from a previous 2% drop.”

The outlook is stable.

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