S&P downgrades China Vanke as its onshore bonds hit record lows

SHANGHAI/HONG KONG, Nov 28 (Reuters) - Ratings agency S&P Global downgraded China Vanke 000002.SZ, 2202.HK on Friday, saying the troubled property developer's financial commitments are unsustainable due to its weak liquidity levels.

Vanke bonds and stocks tumbled to record lows this week with declines initially sparked by a media report that it might face a debt restructuring. The state-backed developer then announced on Wednesday it was seeking to delay an onshore bond repayment for the first time.

Its debt woes have revived concerns that China's property market could again be in crisis after years of many defaults on bond payments in the sector.

In a new report, S&P said Vanke's long-term issuer credit rating was now CCC- down from CCC, and it placed the company on CreditWatch with negative implications.

"The company's debt obligations are currently vulnerable to risks of nonpayment or distressed restructuring, in our opinion," the report said.

S&P said Vanke faced a "bond maturity wall" of 11.4 billion yuan ($1.6 billion) between now and May next year, and forecast Vanke would have negative operating cash flow during that time.

On Friday, a Vanke yuan bond due in March 2027 CN149815= plunged 22.5% to a record low of 31 per 100 par value, triggering a suspension of trade by the Shenzhen Stock Exchange. It had traded at 85 on Monday.

Three other Vanke yuan bonds also dropped 20% or more on Friday, causing trade in them to be suspended.

Vanke's Shenzhen-listed shares were down about 1%. Its Hong Kong-listed stock 2202.HK was up 1.1% on Friday after hitting a record low a day earlier.

($1 = 7.0756 Chinese yuan)