Vanke’s state backer offers fresh aid, but ends unsecured lending

Authorities will continue supporting property giant Vanke – but they’re done writing blank checks.

On November 11, Vanke secured an RMB 1.7 billion loan from its biggest shareholder, state-owned Shenzhen Metro Group, to cover bond repayments (The Paper).

• For those keeping score, that brings Shenzhen Metro’s total support for Vanke to RMB 30.8 billion so far this year.

But from here on, new lifelines will come with tighter conditions.

• On November 2, Shenzhen Metro capped its unsecured credit lines to Vanke – that is, loans without collateral – at RMB 22 billion (Bloomberg).

The newest loan brings Vanke’s unsecured borrowing right up to that limit – meaning any future loans must be backed with pledged assets.

Get smart: Rescuing Vanke has been a political necessity, but the constant lifelines are straining Shenzhen Metro’s own balance sheet.

• Capping unsecured credit and demanding collateral signals authorities' growing unease with open-ended bailouts.

Get smarter: This development is bad news for Vanke, which will be scrambling to find pledge-able assets to secure its next bailout.