Hong Kong’s New World sells first debt in two years with US$400 million in new bonds
MAJOR Hong Kong property developer New World Development has sold US$400 million in US dollar bonds, ending a two-year hiatus in debt sales linked to investor caution after a series of defaults in China’s property sector.
While Hong Kong has not seen major defaults by property developers like in mainland China, investors have been worried about companies’ weakening liquidity due to a struggling residential and commercial property markets.
Proceeds from the sale of 3.5-year senior notes, which priced overnight on Aug 1 at a coupon of 8.625 per cent, will be mainly used to fund its tender offers for up to the same size of existing notes, according to a person with direct knowledge of the deal and a term sheet seen by Reuters.
New World also offered this week to buy back early some US dollar notes in a move that analysts said could ease concerns over the company’s funding costs. Its debt ratios are among the highest in Hong Kong’s property sector.
It offered on Thursday to buy back some of the 4.75 per cent notes due in January 2027 at 96 cents and 6.15 per cent perpetual bonds callable in March 2025 at par. The two bonds have together an outstanding US$958 million.
The 2027 bonds and perpetual bonds were bid at 94 cents and 98.875 cents on the US dollar, respectively, on Friday (Aug 2) according to data by LSEG. The tender offer will expire on Aug 7, 4 pm London time.
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The deal has received more than US$1.2 billion of orders, a term sheet showed, with the majority from Asia investors and asset and fund managers.
CreditSight said in a report that the recent improved pricing in New World’s bonds helped to lower its new issue funding costs compared to the start of the year.
“While we view NWD (New World) as a weak player within the Hong Kong property credit space, we think that the company’s willingness to de-lever has improved lately,” CreditSight wrote.
Reuters reported this week that New World in July secured two onshore loans totalling 1.4 billion yuan (S$240 million) as it seeks to further lower funding costs. REUTERS
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