(Yicai) Nov. 7 -- Shenzhen’s state-owned assets regulator will leverage all possible legal means to assist China Vanke in the case of extreme conditions after the Chinese real estate giant’s shares and bonds took a battering recently.

Vanke is safe for now and, contrary to rumors, has no financial or management risks, the State-Owned Assets Supervision and Management Commission of Shenzhen said at an online meeting yesterday. 

But should there be any emergencies, the commission has the confidence, the funds and the tools to help out by improving the developer’s equity investment structure, buying bonds, raising funds from banks and entering into project tie-ups, it added.

Shenzhen Metro, which is Vanke’s largest shareholder and is owned by the commission, is optimistic about Vanke’s prospects and has no plans to pare its stake in the developer, Shenzhen-based Vanke said yesterday.

Shenzhen Metro will take measures to boost market confidence and help Vanke. For example it will take over some of Vanke’s urban renewal projects in Shenzhen for over CNY10 billion (USD1.3 billion) to inject new liquidity into the developer, it said. It will also buy the company’s bonds in the open market at an appropriate time.

Vanke’s stock has plunged 21 percent since July 31 and its bond prices have dived since it was downgraded by Fitch Ratings last month. The US credit ratings agency reduced its rating to BBB from BBB+ on concerns that a faltering real estate market may affect the firm’s sales but still gave it an industry-leading rating.

The yield on several of Vanke’s US dollar bonds has risen significantly in recent months and reached as much as 60 percent in October, according to data provider DM Chazhaitong.

Vanke had 75 outstanding bonds totaling CNY70.7 billion (USD9.7 billion) as of yesterday, 41 of which or CNY17.9 billion will be due within the next 12 months, according to data provider Wind. The next US dollar bond, worth USD630 million, will mature in March next year, it added.

Sales and financing in the property sector remained sluggish and tight in the second half and many major developers such as Country Garden Holdings have defaulted on bonds, resulting in low market confidence.

Vanke managed to raise over CNY85 billion (USD11.7 billion) from January to October with an average interest rate of 3.64 percent, it said. Vanke is managing its cash flow, is carrying out stress tests and has real-time control over its funding.

Vanke’s shares [SHE: 000002] came off 0.3 percent today to close at CNY11.93 (USD1.64) in Shenzhen, after ending 6.2 percent higher yesterday on the news that the Shenzhen SASAC had attended the firm’s online meeting.

Editor: Kim Taylor