China Vanke Hit with Fresh S&P Downgrade as Debt Concerns Intensify

S&P Global issued another downgrade on China Vanke’s credit rating on Thursday evening, deepening worries over the real estate giant’s financial stability as it struggles to manage mounting debt. The ratings agency cut Vanke’s onshore and offshore bonds to CCC- from CCC, pushing them further into junk territory and reinforcing market fears about the company’s ability to navigate its ongoing debt restructuring efforts. This marks S&P’s second downgrade for Vanke in November alone.

The agency also maintained a negative outlook, signaling that the pressure on the state-backed developer is unlikely to ease soon. Concerns escalated sharply this week following reports that Vanke was seeking to extend repayment deadlines on certain bonds, a move that investors interpreted as a sign of deeper liquidity challenges.

The downgrade triggered a selloff across Vanke’s onshore and offshore bonds, while its shares tumbled in both Hong Kong and mainland China markets. Traders are increasingly anxious that Vanke—long considered one of China’s more stable, state-supported developers—could become the next major casualty in the country’s prolonged property crisis. A default from Vanke would likely have a much larger impact than earlier high-profile failures by private players such as Evergrande and Country Garden.

Vanke has endured a series of rating cuts throughout the year as China’s property sector continues to struggle with sluggish demand, weak home sales, and tightening liquidity. Despite Beijing rolling out multiple support measures, including relaxed capital-raising rules and policies aimed at boosting homebuying sentiment, the real estate market remains subdued. The sector, which contributes up to a third of China’s economic activity, has yet to show meaningful recovery, leaving heavily indebted developers like Vanke under persistent pressure.

Vanke’s latest downgrade underscores the growing risks facing China’s real estate market and highlights the broader challenges confronting the country’s economic outlook as policymakers attempt to stabilize the sector.