Goldman Seeks to buy part of Hong Kong builder New World’s loan
The US bank has approached some lenders involved in the record US$11 billion loan
[HONG KONG] Goldman Sachs Group has sought to purchase a portion of New World Development’s loans at a discount, an indication of how one potential investor would value the debt of a builder that’s become a poster child of Hong Kong’s property woes.
The US investment bank had approached some lenders involved in the record US$11 billion loan extended to New World in June, according to people familiar with the matter. Goldman is willing to buy the debt at a discount of at least 15 cents on the US dollar, the people said, who asked not to be identified discussing private matters.
Talks are preliminary, said the people, adding that it is unclear if any deal would materialise. It is also uncertain if any other financial institutions have also considered trying to purchase pieces of the loan on the secondary market.
A representative for Goldman Sachs declined to comment.
The discussions highlight continued interest in one of Hong Kong’s most indebted developers despite the city’s real estate downturn.
Investors are treating New World’s debt as stressed rather than distressed, the people said, reflecting the collateral backing the loan, which includes its headquarters, New World Towers.
The collateral makes the loan more attractive for investors as it increases the likelihood that the company will repay the loan, unlike their bonds which are not asset-backed. New World still needs to manage US$6.8 billion in bond obligations, according to Bloomberg-compiled data.
Banks have grown cautious about extending further support, increasing the need for outside investors. Talks with Blackstone and CapitaLand Group have stalled, underscoring the challenge.
In September, New World secured a HK$3.95 billion (S$656 million) loan – the amount was 75 per cent less than the upper end of the company had previously sought. Earlier in the year, Ares Management had also explored buying portions of New World debt, Bloomberg News reported. BLOOMBERG
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