(Bloomberg) -- Chinese developer Sunac China Holdings Ltd. has sought help from a city government during a soured market, the latest sign that the nation's property slowdown and the crisis at Evergrande are weighing on builders.
Sunac asked authorities in eastern Shaoxing to offer “special policy support” because operations in the city have become difficult, according to a letter from a subsidiary to the local government and seen by Bloomberg.
While the letter didn't elaborate on the type of assistance requested by the unit, it said tighter housing policies in the city since early June dealt a sudden blow to the home market, damping sales and cash flow in a local project. The Sunac group as a whole has also “run into big hurdles and difficulties in terms of cash flow and liquidity,” it said.
China's residential property slowdown has deepened as regulators' efforts to curb the real estate sector coincide with the worsening cash crunch at China Evergrande Group. Home sales by value slumped 20% in August from a year earlier, the biggest drop since early last year.
Read how Evergrande's debt crisis is a stress test no one wanted
In Shaoxing, Sunac invested 7.7 billion yuan ($1.2 billion) into a project including tourism, business and residences, but was only able to sell one to two units a week since launching sales in August, recouping just over 200 million yuan, according to the document.
“Sentiment in the housing market has fallen to almost freezing point,” the company said in the letter. “We face huge pressure.”
Representatives for Sunac declined to comment. Calls to the housing bureau in Shaoxing city went unanswered out of business hours late Friday.
Sunac's dollar bonds slumped on Friday after the letter circulated in the market, according to credit traders. The developer's 5.95% bond due 2024 dropped 4.6 cents on the dollar to 85 cents, set for its lowest closing level on record, Bloomberg-compiled prices show.
Sunac suffered a significant sales decline in July and August, Bloomberg Intelligence analyst Kristy Hung wrote in a note this month. Still, the developer's balance sheet improved this year, and it complies with two of the debt metrics known as the three red lines.
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With assistance from Bloomberg
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