China scrambles to prevent another big property developer going bust

Chinese banks are reportedly scrambling to bail out one of the country’s biggest property developers after its credit rating was downgraded to “junk” status by Moody’s on Monday.

Chinese banks are reportedly scrambling to bail out one of the country’s biggest property developers after its credit rating was downgraded to “junk” status by Moody’s on Monday. Beijing has been struggling to restore confidence in the country’s ailing real estate industry and appears to be working flat out to prevent China Vanke going the way of Evergrande and Country Garden, which both defaulted on their debts and are at risk of being liquidated. Chinese state media reported Tuesday that 12 major banks, including the six largest state-owned lenders, were in talks to provide a syndicated loan for Vanke worth as much as 80 billion yuan ($11.2 billion) to enable the company to meet upcoming repayment deadlines. The provision of the loan is still uncertain, state media outlet Cailianshe reported, citing an unnamed source close to the potential deal. Another state media outlet, the Economic Observer, reported that several insurance companies have sent teams to Vanke’s headquarters for a new round of debt negotiations in a bid to avert a default. CNN has reached out to Vanke for comment. Founded 40 years ago, Vanke was the country’s second largest developer by sales last year but it has been hammered by the collapse in demand for apartments and the slump in home prices. Vanke’s stock soared in Hong Kong and Shenzhen following the reports of potential new financing. On Tuesday, its Hong Kong-listed shares ended up 10.3%, while the Shenzhen-traded stock closed 5.7% higher. But they are still in negative territory so far this year.