Beijing flinches from Evergrande bailout, nudges government-owned firms to snap up assets, report says

• Beijing is nudging government-owned and state-backed firms to snap up Evergrande assets, Reuters reported.
• Vanke and China Jinmao Holdings, for example, are among those that have been asked to purchase assets.
• China is not expected to directly intervene in the form of an Evergrande bailout, sources told Reuters.

As debt woes continue to loom over Evergrande, a key clue has emerged on what the Chinese government will do about the beleaguered property developer teetering on the edge of insolvency.

Beijing is nudging government-owned firms and state-backed property developers to snap up Evergrande assets, Reuters first reported Tuesday, hoping the deals will help contain any potential economic damage a collapse may bring.

That comes as China is not expected to directly intervene in the form of an Evergrande bailout, sources told Reuters. Instead, Vanke and China Jinmao Holdings, for example, are among the state-backed property developers that have been asked to purchase assets from Evergrande, as well as China Resources Land.

Local governments have also been tapped to negotiate with government-backed firms to participate in asset sales, Reuters added. And in Guangzhou, a southern city in China, some government-owned firms have already conducted due diligence.

Guangzhou City Construction Investment Group is reportedly close to acquiring Evergrande's Guangzhou FC Soccer stadium as well as some nearby residential projects, according to Reuters.

Evergrande, with $309 billion in liabilities, is the world's most indebted company. It is China's second-biggest property developer with over 1,300 real estate projects and 7.3 billion square feet of contracted land.

Markets were rattled last week on fears that the fallout of a potential Evergrande default would reverberate across the globe. The embattled firm missed a deadline to pay $83.5 million in interest on its dollar-denominated bond last week. Another $47.5 million coupon payment is due on Wednesday.