(Bloomberg) -- A Chinese scheme to help staunch a liquidity crunch among developers is set for an important expansion, as builders continue to struggle with a property debt crisis that has dragged on the world’s second-biggest economy.

For the first time, a developer that was among a small group of property firms to issue local bonds with state guarantees under a program that emerged in August is coming back with another such offering. 

Seazen Holdings Co., which has residential and commercial projects in more than 100 cities, plans to issue as much as 1.5 billion yuan ($208 million) of notes guaranteed by state-owned China Bond Insurance Co. The builder sold 1 billion yuan of such debt in September under the effort, which Chinese authorities crafted to help some developers raise cash with guarantees from the bond insurer amid the sector’s liquidity crunch and home-sales slump.

The scheme’s emergence sent shares and dollar bonds surging in August, fueling hopes that government support of the real estate sector would help builders’ financing and boost property demand. But investors have been watching for signs of further help, especially as one developer that recently sold state-guaranteed bonds failed to make a debt payment this month. Doubts persist, with prices in China’s builder-dominated high-yield dollar bond market sliding back to record lows.

Help from issuing guaranteed onshore notes “should be limited given the bond offering size has been small as compared to the builders’ liquidity gap,” said Iris Chen, a credit desk analyst at Nomura International HK Ltd. “This type of issuance will likely be repeated as a gesture of support from policymakers, but it will offer limited help to builders’ financials and investor confidence.”

Seazen, China’s 17th-largest developer by contracted sales, declined to comment on a potential new guaranteed-bond sale. China Bond Insurance didn’t immediately reply to a written request. 

Authorities’ property-leverage crackdown resulted in record levels of defaults and concerns about debt repayments of even the largest developers. Those worries in recent weeks centered around CIFI Holdings Group Co., which had been one of China’s higher-rated builders. It failed to make a convertible-bond interest payment earlier this month, prompting fresh declines in developers’ stocks and dollar bonds. CIFI said it experienced holiday-impacted delays in remitting cash offshore.

Fitch Ratings withdrew its ratings on both Seazen and CIFI last week, saying the firms chose “to stop participating in the rating process.”

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