In a base-case scenario, bondholders may recover just 10.1 per cent of what they were owed, roughly half what already deeply distressed market prices suggested, the British bank said in a report.
However, in a worst-case scenario, assuming lower proceeds from onshore assets and netting out intragroup balances, the estimated recovery would drop to just 0.9 per cent, Barclays said.
Furthermore, if banks were paid ahead of offshore bondholders, “then the residual asset pool after satisfying these claims would be insufficient to provide a meaningful recovery for offshore bondholders”, the bank said.
The recovery rates are calculated based on the 2024 financials of Vanke Real Estate Hong Kong, the issuer of China Vanke’s US dollar bonds. Barclays added that the outcome would depend heavily on offshore creditors’ ability to access and enforce claims against onshore assets, and on the priority of claims in a restructuring.
Those estimates are even bleaker than what market pricing suggests. China Vanke’s US dollar bond due in 2027 is indicated around 20 cents on the dollar, while the 2029 note trades near 19 cents.
Qiushi, Vanke Real Estate Hong Kong, Overseas Chinese Town Enterprises Co., Shanghai, State-owned Assets Supervision and Administration Commission of Shenzhen, Vanke's, Reuters, Shenzhen, Beijing, US dollar bonds, China’s, Hong Kong, Communist Party, Barclays, China Vanke#China #Vanke #offshore #bondholders #face #wipeout #Barclays #worstcase #scenario1767830225
Barclays
Beijing
bondholders
China
China Vanke
Chinas
Communist Party
face
Hong Kong
Offshore
Overseas Chinese Town Enterprises Co.
Qiushi
Reuters
scenario
Shanghai
Shenzhen
State-owned Assets Supervision and Administration Commission of Shenzhen
US dollar bonds
Vanke
Vanke Real Estate Hong Kong
Vanke's
wipeout
worstcase
