<div id="readability-page-1"><div>Fitch Ratings-Hong Kong-17 December 2025:Fitch Ratings has downgraded Chinese homebuilder China Vanke Co., Ltd.'s Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) to 'C' from 'CCC-', and the Long-Term IDR on China Vanke's wholly owned subsidiary, Vanke Real Estate (Hong Kong) Company Ltd (Vanke HK) to 'CC' from 'CCC-'. Fitch has also downgraded Vanke HK's senior unsecured rating and the rating on its outstanding senior notes to 'C' from 'CC', with a Recovery Rating of 'RR5'. Fitch has removed the Rating Watch Negative (RWN) on all the ratings.The downgrade follows China Vanke's entry into a grace period of five working days for the repayment of principal and interest on its CNY2 billion onshore bond that matured on 15 December 2025.Key Rating DriversHeightened Default Risk; Grace Period: China Vanke's entry into a five-working-day grace period after it failed to repay the CNY2 billion onshore bond indicates heightened default risk. The company did not reach an agreement with bondholders on its proposals to extend the maturity of the bond during their meeting on 10 December. It expects to hold another bondholders' meeting during the grace period.Tight Liquidity, Large Debt Maturities: China Vanke's available cash fell to CNY60 billion by end-September, from CNY69 billion at end-June. We believe most of the cash comprises pre-sale deposits. China Vanke faces about CNY6 billion of capital-market debt maturing in December 2025 and a further CNY12 billion in 2026. We believe the company may be unable to repay these maturities without shareholder support.Its largest shareholder, Shenzhen Metro Group Co. Ltd (SZMC), provided about CNY29 billion in shareholder loans to China Vanke from January to November 2025, supporting repayment of capital-market debt during this period.Negative FCF Persists: We expect China Vanke's free cash flow (FCF) to remain negative in 2025 and 2026, even after including asset-sale proceeds. We expect FCF outflow of CNY9 billion-10 billion in 2025 and CNY5 billion in 2026, against CNY10 billion in 2024, including the potential proceeds from asset disposals.Rated on Standalone Basis: SZMC, wholly owned by the Shenzhen municipality's State-owned Assets Supervision and Administration Commission, has a 27.18% stake as China Vanke's largest shareholder. Fitch rates China Vanke on a standalone basis as SZMC has a minority stake, does not control the board of China Vanke and does not consolidate China Vanke.We rate Vanke HK, China Vanke's sole offshore financing platform, on its standalone credit profile of 'cc' as the parent is under financial distress.Peer AnalysisChina Vanke's ratings reflect its heightened default risk from being in a grace period for bond repayment.Fitch’s Key Rating-Case AssumptionsFitch's Key Assumptions Within Our Rating Case for the Issuer:- Sales to drop by 45% in 2025 and 30% in 2026 (1H25: -46%).- FCF outflow of CNY5 billion-10 billion in 2025-2027 after asset disposal proceeds (1H25: outflow of CNY9 billion).- Trade and bill payables to decline by CNY45 billion in 2025 and CNY35 billion in 2026 (1H25: decline of CNY24 billion).Recovery AnalysisThe recovery analysis assumes that Vanke HK would be liquidated in a bankruptcy. The liquidation value approach usually results in a higher value than the going-concern approach, given the nature of homebuilding. We assume a 10% administrative claim.Liquidation ApproachThe liquidation estimate reflects our view of the value of balance-sheet assets that can be realised in sale or liquidation processes conducted during a bankruptcy or insolvency proceeding and distributed to creditors.- 0% advance rate applied to net inventory. The onshore property projects are mostly co-owned with China Vanke. We therefore believe the recovery prospect is unclear, as China Vanke is in the process of a debt restructuring.- 50% advance rate applied to Vanke HK's equity stake in GLP Holdings, L.P. at a book value of CNY15 billion.- 50% advance rate applied to property, plant and equipment, and investment properties, which are of insignificant value.- 0% advance rate applied to excess cash. China's homebuilding regulatory environment means that available cash, including regulated presales deposits, is typically prioritised for project completion, including payment of trade payables. Net payables (trade payables - available cash) are included in the debt waterfall ahead of secured debt. However, we do not assume that available cash in excess of outstanding trade payables is available for other debt-servicing purposes and therefore apply an advance rate of 0%.- Vanke HK's bank loans are offshore unsecured bank loans that rank pari passu with its offshore bonds.The allocation of value in the liability waterfall results in a Recovery Rating of 'RR5' for the offshore senior unsecured debt.RATING SENSITIVITIESFactors that Could, Individually or Collectively, Lead to Negative Rating Action/DowngradeFor China Vanke:- Fitch would downgrade the IDR to 'RD' (Restricted Default) if the company experiences an uncured expiry of the original grace period or a debt restructuring is completed, or if the group fails to meet any of its debt obligations.For Vanke HK:- Fitch would downgrade the IDR to 'C' if a default or default-like process has begunFactors that Could, Individually or Collectively, Lead to Positive Rating Action/UpgradeFor China Vanke:- No positive rating action is anticipated, as China Vanke is in a grace period for bond repayment.For Vanke HK:- No positive rating action is anticipated, as a cross-default can be triggered if China Vanke is in default of a bond payment.Liquidity and Debt StructureChina Vanke reported CNY60 billion of cash at end-September 2025, including regulated pre-sale funds, against short-term debt of about CNY151 billion. The company has about CNY6 billion of capital-market debt maturing in December 2025 and a further CNY12 billion in 2026.Issuer ProfileChina Vanke is one of China's 10 largest developers by contracted sales in 2024 and year-to-date 2025, with a nationwide footprint. Its main businesses are real-estate development and property services. Vanke HK is China Vanke's main offshore fundraising entity.REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING The principal sources of information used in the analysis are described in the Applicable Criteria. MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS Click here to access Fitch's latest quarterly Global Corporates Sector Forecasts Monitor data file which aggregates key data points used in our credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included. ESG ConsiderationsThe highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.Vanke Real Estate (Hong Kong) Company Ltd; Long Term Issuer Default Rating; Downgrade; CC; Rating Watch Off----senior unsecured; Long Term Rating; Downgrade; C; Rating Watch OffChina Vanke Co., Ltd.; Long Term Issuer Default Rating; Downgrade; C; Rating Watch Off; Local Currency Long Term Issuer Default Rating; Downgrade; C; Rating Watch OffContacts:Primary Rating AnalystRebecca Tang, CFADirector+852 2263 9933rebecca.tang@fitchratings.comFitch (Hong Kong) Limited19/F Man Yee Building 60-68 Des Voeux Road CentralHong KongSecondary Rating AnalystLulu Shi, CFADirector+86 21 6898 8003lulu.shi@fitchratings.comCommittee ChairpersonTyran Kam,Senior Director+852 2263 9909tyran.kam@fitchratings.comMEDIA RELATIONS: Jack Li, Beijing, Tel: +86 10 5957 0964, Email: jack.li@thefitchgroup.comVivian Kam, Hong Kong, Tel: +852 2263 9612, Email: vivian.kam@thefitchgroup.comLeslie Tan, Singapore, Tel: +65 6796 7234, Email: leslie.tan@thefitchgroup.comAdditional information is available on www.fitchratings.comADDITIONAL DISCLOSURESDodd-Frank Rating Information Disclosure FormSolicitation StatusAdditional Disclosures For Unsolicited Credit RatingsEndorsement StatusEndorsement PolicyALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. 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Fitch Ratings has downgraded China Vanke's Long-Term Foreign- and Local-Currency Issuer Default Ratings to 'C' and Vanke HK's to 'CC'. This follows China Vanke's entry into a grace period for a CNY2 billion bond repayment, indicating heightened default risk. The company faces tight liquidity and large debt maturities, with negative free cash flow expected to persist. Fitch rates Vanke HK on its standalone credit profile due to the parent's financial distress.

Fitch Downgrades China Vanke to 'C' and Vanke HK to 'CC'