China’s private property developers have accelerated the sales of assets to state-owned enterprises (SOEs) amid a deepening debt crisis, despite the recent easing measures introduced by the government. Hong Kong-listed Yuzhou Group Holdings said late on Tuesday that it had entered a formal agreement with a subsidiary of China Resources Mixc, which is controlled by state-owned China Resources Land, to sell its property management services company for 1.06 billion yuan (US$168 million). The announcement came after Yuzhou said the same day that its bond due in 2023 was suspended from Wednesday, as it had missed a coupon payment for the notes. The increase in asset sales by private developers comes as their debt problems continue to drag on. The spillover to the financial markets has also been prolonged, as their bond and stock prices have slumped. These companies have been affected by tightened property regulations including the “three red lines” , which are thresholds on borrowing outlined by the central government in August 2020. Which indebted moguls will feel the most heat at China’s ‘Two Sessions’? Last year, highly leveraged players’ debt problems took centrestage during an onshore deleveraging campaign. It started in the first half of 2021, when a few home builders including Sichuan Languang Development missed bond payments. Then a US$310 billion debt crisis emerged in August at China Evergrande Group, the world’s most-indebted developer . The crisis then extended to healthier firms such as Sunac China Holdings and Logan Group, as investor sentiment became fragile. Chinese developers face piling debt, with around US$118.5 billion in offshore bond payments coming due this year, according to Fitch Ratings. Is China’s financial lifeline strong enough for indebted developers? Logan Group is also selling a property project company to state-owned China Overseas Grand Oceans Group, according to an announcement by the buyer on Tuesday. It said that it had entered an agreement with a unit of Logan and another co-developer. Equity interest and shareholder loans for Logan’s property project in Shantou city, co-developed with Shenzhen Yudeying Investment, will be sold for 1 billion yuan, China Overseas Grand Oceans Group said. Yuzhou also said trading in its shares was suspended until further notice. “The company is reviewing possible options to implement a holistic solution to the current situation, with a view to secure the long-term future of the company for the benefit of all stakeholders,” it said. Four Hong Kong banks set aside US$1.02 billion for China property risks The Shenzhen-based company has missed payments for other notes, and sought exchange offers for untendered notes. It warned at the end of January that coupon payments totalling US$110 million on five other notes due within the next seven weeks were likely to be delayed as well. Chinese authorities have eased some property market policies in recent months, including local governments reducing home purchase restrictions and banks lowering mortgage rates. Despite these efforts, property sales and investment were still sluggish, with Shimao recording a 62 per cent plunge in sales in February. The Hang Seng Properties Index shed 1.7 per cent on Wednesday. Logan was down 1.6 per cent, China Resources Land was down 3.3 per cent but China Overseas Grand Oceans Group rose 0.9 per cent. Chinese high-yield dollar bonds fell for the 10th consecutive day on Wednesday, according to Bloomberg data.