State-owned firm heeds Beijing’s call to buy Evergrande’s assets
Business & Technology
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Yesterday, Evergrande reached a $1.5 billion deal to sell most of its stake in a commercial bank to a state-owned enterprise, pending regulatory approval.
- It’s only a drop in the debt bucket — which totals $304 billion in liabilities, including $88.5 billion in interest-bearing debt — but it could indicate the government is undertaking an indirect, partial bailout.
- The bank itself will get a chunk of the proceeds, since it had lended money to Evergrande. So the developer’s quest to raise cash from selling other assets, like its EV business, continues.
Also relevant: Some WeChat groups used by people owed money by Evergrande to organize protests have been blocked, Reuters reported.
- At least eight groups with 200 to 500 people have been targeted. Some members were visited by police and asked to sign papers promising not to protest or break the law.
- In other words, Beijing is not only boosting Evergrande’s income, but also suppressing social unrest in order to avoid a broader crisis.
However: None of this changes that Evergrande’s interest due dates keep piling up. Yesterday the company missed its second offshore bond payment in a week. It will go into default if it can’t pay within 30 days.
