CHINA Vanke posted its biggest sales decline in six years, adding to the woes of the Chinese property developer that’s trying to stave off its first-ever debt default. 

Vanke’s contracted sales for February plunged 53 per cent from a year ago to 14 billion yuan (S$2.54 billion), the Shenzhen-based company said. It was the biggest monthly slide since at least 2018, based on data compiled by Bloomberg. The value of homes sold by the company fell 28 per cent from January. 

The deep sales slump will likely exacerbate a cash crunch for China’s second-largest developer by sales. The company is discussing a debt-swap plan with major creditors to help the firm avoid defaulting on public bonds. 

Some of Vanke’s long-dated US dollar bonds have plunged below 50 cents on the dollar, indicating investors see a high risk of default. Moody’s Ratings downgraded the company to junk territory earlier this week, and warned of further cuts. 

The developer has bonds maturing this year, including a US$600 million note due in June. The short-dated notes traded at 93.8 cents on the dollar on Friday, indicating little concern of a near-term implosion.

Vanke, whose major shareholder is a state-owned firm in Shenzhen, has been seen as a bellwether for government support of major property developers.

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In late 2023, after a drop in its bond prices, a senior official of Shenzhen’s State-owned Assets Supervision and Administration Commission expressed confidence in Vanke and said it would offer support to the developer in an “extreme situation.” 

The company’s shares in Hong Kong dropped 4.55 per cent on Friday morning following the February sales report, bringing their year-to-date decline to 18.56 per cent. Vanke’s Shenzhen shares were down 2.68 per cent.

Bearish wagers on Vanke’s shares have soared to more than 14 per cent of their free float in Hong Kong, making it one of the most shorted stocks in Asia, according to S&P Global Market Intelligence data.

Among all Chinese developers, Vanke’s short-selling ratio is below only that of Country Garden, which was recently confronted with a liquidation petition in Hong Kong. BLOOMBERG