Beijing is working behind the scenes to pull Evergrande out of danger, urging state-owned firms to buy the property developer's assets

• China has asked state-backed firms to buy Evergrande's assets while the property giant struggles to pay its debts, reported Reuters.
• It's a sign that, for now, the government won't give Evergrande a bailout, sources told Reuters.
  
  
• Evergrande has started off by selling $1.5 billion of its stake in a bank to a state-owned group.

Debt-saddled Evergrande is poised to get some relief from Chinese state-backed firms, as Beijing pressures government-affiliated companies and developers to buy the property giant's assets.

It's a sign that China might not bail out Evergrande, the country's second-biggest property developer and the world's most indebted company, for now. Multiple sources told Reuters that Beijing's direct intervention through a bailout is unlikely.

Instead, the government has asked firms like China Vanke, a real estate developer bought by the state in 2017, and Jinmao Holdings, a property subsidiary of the state-owned SinoChem Holdings, to purchase Evergrande's assets, reported Reuters.

Evergrande, which is $305 billion in debt, is already making progress on that front.

On Wednesday, it announced it would sell off $1.5 billion of its stake in Shengjing Bank to Shenyang Shengjing Finance Investment Group, an investment company that manages Chinese state assets.

All of the proceeds from that transaction will be used to pay off Evergrande's debts, the company said, as it faces another deadline for $47.5 million in coupon payments this week.

Evergrande's missed loan payments worth hundreds of millions in the last month have prompted fears worldwide that it would default on its loans and collapse, destabilizing China's economy given its sheer scale.

Meanwhile, state-owned enterprise Guangzhou City Construction Investment Group is in talks to acquire Evergrande's unfinished soccer stadium worth $1.8 billion, per Reuters.

Construction of the stadium, which is shaped like a lotus and built to seat 100,000 people, has been left at a standstill because of Evergrande's debt crisis, reported Insider's Cheryl Teh.

This isn't the first time that state-backed firms have stepped in to rescue Evergrande. When it was hit with another cash crunch scare in late 2020, two companies owned by city governments bought equity worth $4.6 billion from one of its main units, reported Bloomberg.

Back then, Evergrande's debt was reported to be around $120 billion. The real estate group had lashed out at doubts about its long-term financial health, calling rumors online "pure defamation" and "fabricated."