Fitch cuts China Vanke to BB+

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

Fitch said it placed all the ratings on rating watch negative.

“The downgrade reflects China Vanke's weakened sales performance, while capital market volatility has curtailed its funding access. We believe these factors could lead to a sustained deterioration in financial flexibility amid upcoming maturities. We expect China Vanke to repay its CNY 13 billion capital market debt due for the remainder of 2024 and CNY 36 billion in 2025 using mostly cash on hand and internal cash flow generation via sales and asset monetization, with sales stabilizing over 2024. However, continued weakness in the industry or the company's sales performance could weaken China Vanke's liquidity buffer,” the agency said in a press release.

The RWN captures the sector’s volatility and China Vanke’s sales prospects as well as the timing and progress of its asset sales and new funding plans,” Fitch said.

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