HONG KONG, March 5 (Reuters) - State-backed China Vanke

said on Tuesday the funding for repaying its dollar

notes due on March 11 was in place, amid more selling pressure

on its bonds as concern mounts over liquidity at the Chinese

developer.

China's No.2 property developer by sales said in a statement

to Reuters that the repayment process for the $630 million bond

was "orderly". Shares of the company and its 2029 dollar bonds

recovered slightly after the statement.

There has been a sell-off in Vanke shares and bonds over the

past week amid reports the developer, previously seen by the

market as financially sound, was seeking debt maturity

extensions with some insurers.

This comes against the backdrop of a string of defaults by

Chinese developers since the property sector slipped into a debt

crisis in mid-2021, including giants China Evergrande Group ( EGRNQ )

and Country Garden ( CTRYF ).

Any repayment trouble at Vanke, one of few remaining Chinese

developers with investment grade credit ratings, could further

hamper market confidence, analysts said.

Moody's downgraded some of Vanke's bonds to "junk" in

November, and if another rating agency, either S&P or Fitch,

follows suit, those bonds face the prospect of being dumped out

of some of the world's most important investment indexes.

China has struggled to contain the crisis despite measures

to boost home sales and add liquidity into the developers. On

Tuesday, authorities reiterated their commitment to stabilise

the property sector with targeted measures while providing

financing to "justified" projects.

Premier Li Qiang said in his annual report to parliament

that China would also quicken the development of a new model for

the property sector, focusing on building more affordable

housing and meeting various demand for homes.

China Vanke's 2029 dollar bonds recovered slightly to be bid

at 40.358 cents on the dollar after its statement, from earlier

bids at 39.045 cent. But they were still down 5.4 cents from

Monday, data from Duration Finance showed.

Bids for its 2027 bonds dropped 7 cents to 46.533 cents.

Some of the firm's onshore bonds also eased, with a bond due

March 2025 dropping more than 7%.

Vanke's Shenzhen-listed shares gave up early

losses to climb 0.2% in afternoon trading. Its Hong Kong-listed

shares were down more that 2%, recovering slightly from a 4.1%

drop earlier in the session to a record low of HK$5.37 but still

on course for a seventh straight session of decline.

CLUB LOAN?

Vanke is seeking to raise a club loan in Hong Kong, with

Bank of China (Hong Kong), the lead bank of the loan,

having already obtained internal approval to commit HK$1.5

billion ($191.73 million), Debtwire reported on Monday.

Vanke declined to comment on the report.

Debtwire reported in January that Vanke was aiming to raise

$631 million in a club loan to cover two remaining dollar bonds

due this year in May and June.

The deal intelligence provider also said in its Monday

report that Vanke had received verbal consent from some insurers

to defer their put options exercisable in the coming months on

some of the so-called insurance debt investment plans, on

condition the developer would make interest payments on time on

these instruments.

Vanke told a meeting with financial institutions earlier

this year that it planned to use its existing offshore fund and

club loans to repay the March bond maturity, a person familiar

with the talks said.

It added at the time that its existing offshore fund was

sufficient to cover the repayment even without new loans from

banks, the person added.

($1 = 7.8237 Hong Kong dollars)