AsianFin -- China Vanke, facing financial strain, announced that its major state-owned shareholder, Shenzhen Metro, will provide a loan of 2.8 billion yuan ($383.12 million) to help stabilize the property developer. In exchange, Vanke will pledge 211.5 million shares, representing 18.3% of its listed property services unit, Onewo Inc., as collateral.

This loan marks the first liquidity support from Shenzhen Metro following a senior management shake-up at Vanke last month, which brought increased state oversight to manage potential repayment risks.

The loan news caused a surge in Vanke’s bonds on Tuesday, with its offshore bond due in May 2025 rising to 97.111 cents on the dollar, and its yuan bond due March 2027 climbing 13.5%.

In addition to the loan, Vanke also confirmed it would repay its 3 billion yuan notes maturing on February 16, highlighting its commitment to on-time repayments.

Analysts believe the loan is part of the government’s strategy to prevent a potential default by Vanke, with the favorable terms—such as a high loan-to-value ratio of 70% and a low interest rate of 2.34%—seen as beneficial for the company. However, experts noted that the loan is modest compared to the over 30 billion yuan in public bonds Vanke has maturing later this year.