Evergrande Sells Bank Stake To Repay Debt

Cash-strapped China Evergrande Group left its offshore bondholders guessing whether it would pay interest on a bond coupon due Wednesday despite agreeing to settle debt with a Chinese bank in a $1.5 billion stake divestment deal, Clare Jim and Karin Strohecker reported for Reuters.

Photo Insert: The worry that Evergrande's woes could spread through China's financial system and reverberate around the world was eased by the Chinese central bank having vowed to protect homebuyer interest.

With liabilities of $305 billion, Evergrande has sparked concerns its woes could spread through China's financial system and reverberate around the world - a worry that has eased with the Chinese central bank vowing to protect homebuyer interest.

Evergrande said in an exchange filing that it would sell a 9.99 billion yuan ($1.5 billion) stake it owns in Shengjing Bank to a state-owned asset management firm. The bank, one of Evergrande's main lenders, demanded all net proceeds from the sale go towards settling the developer's debts with Shengjing.

As of the first half last year, the bank had 7 billion yuan in loans to Evergrande, according to a report by brokerage CCB International, citing news reports.

The move underscores how Evergrande, once China's top-selling developer and now expected to be one of the largest-ever restructurings in the country, is prioritizing domestic creditors over offshore bondholders.

It also highlights the role state-owned enterprises may play in Evergrande's denouement. The company is due on Wednesday to make a $47.5 million bond interest payment on its 9.5% March 2024 dollar bond.

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