(Yicai) Dec. 18 -- China Vanke’s shares declined after the struggling real estate developer proposed payment extension options to creditors for a second bond maturing this month.

Vanke [SHE: 000002] closed 1.8 percent down at CNY4.87 (69 US cents) per share in Shenzhen today, while its Hong Kong-listed stock [HKG: 2202] fell 1.9 percent to HKD3.55 (45 US cents).

The bond’s trustee, Bank of Communications, published the five proposed options for 22 Vanke MTN005 on the Shanghai Clearing House’s website late yesterday, along with a proposal to extend the CNY3.7 billion (USD525.4 billion) note’s grace period from five working days to 30.

Each option suggests extending the bond’s maturity by 12 months. Four of them require Vanke to provide credit-enhancement measures, with different repayment methods for the principal and interest.

Vanke announced earlier that it would hold the first bondholders meeting to extend 22 Vanke MTN005 on Dec. 22, requiring approval from over 90 percent of creditors. The deadline for voting is 3 p.m. on Dec. 25.

The proposal to lengthen the grace period aims to grant Vanke and the creditors more time to reach a compromise. The voting for the grace period is the same as that for the extension.

Vanke is also waiting for feedback on a revised proposal for extending repayment of a CNY2 billion note that includes additional interest payments, after the first proposal was rejected. The bond, 22 Vanke MTN004, was due on Dec. 15 and has a grace period of five working days.

The Shenzhen-based company held a creditor meeting today to discuss the new extension plan for 22 Vanke MTN004, with voting set to end at 10 a.m. on Dec. 22.

The failure to approve an extension to 22 Vanke MTN004 has intensified market doubts about Vanke’s willingness and ability to repay, increasing pressure on the negotiations for 22 Vanke MTN005.

The outcome of the vote on 22 Vanke MTN004 increases the pressure on Vanke’s negotiations over 22 Vanke MTN005, as holders of the latter may demand higher risk compensation or stricter credit enhancements, making bondholders more cautious or even confrontational, industry insiders have told Yicai.

As of Nov. 30, Vanke had repaid CNY19.5 billion (USD2.7 billion) in Chinese public bonds this year. The builder has 13 outstanding corporate bonds and medium-term notes in the home market, worth a combined CNY20.3 billion (USD2.8 billion).

It has another CNY10 billion in Chinese yuan-denominated bonds coming due between April and July next year.

Editors: Tang Shihua, Futura Costaglione