New World Seeks Bank Refinance for $11 Billion
New World Development Co., one of Hong Kong’s largest property developers, is looking to refinance around HK$87.5 billion (US$11.2 billion) of loans by June 2025. The move comes under a hurry to address liquidity worries and before the termination of a covenant waiver in April. Failure to extend the waiver could lead to some of the lenders calling for early redemption, adding to the company’s financial stress.
In order to obtain the refinancing, New World has offered a large collateral package comprising 25 property assets worth US$15.3 billion. They include famous properties like New World Tower, K11 Art Mall, and 11 Skies in Hong Kong, as well as mainland Chinese properties such as the Shanghai K11 and Shenzhen K11 ECOAST. Another US$3.8 billion worth of properties is being presented as collateral for loans that will mature after 2027, increasing the total collateral value to US$19.1 billion.
The refinancing talks include more than 40 lenders including top Chinese banks such as Bank of China and ICBC, local banks such as HSBC and Hang Seng Bank, and universal banks such as Credit Agricole and Standard Chartered. It is among the biggest refinancing exercises done by a Hong Kong company ever.
As of December 2024, New World had loans and bonds worth HK$146.5 billion in its balance sheet, with only HK$21.9 billion in cash on hand. The company also possesses HK$35.4 billion worth of perpetual bonds, which are now selling at distressed prices.
A successful refinancing arrangement would dramatically enhance New World’s balance sheet and revive investor confidence. But defaulting on negotiations may result in more financial stress and higher repayment hazards for bondholders. The outcome of the discussions is watched intently in Asia’s real estate and banking industries.
