New World Asks Banks to Refinance $11 Billion Loans by June

(Bloomberg) — New World Development Co. has requested banks to refinance HK$87.5 billion ($11.2 billion) of its loans by the top of June, in keeping with individuals acquainted with the matter, because the cash-strapped builder seeks to rapidly shore up its liquidity.

The urgency stems partly from the expiration subsequent month of a covenant waiver on New World’s present loans, two of the individuals stated, asking to not be recognized discussing personal issues. If the waiver expires earlier than a refinancing deal, some banks may demand quick reimbursement, although that state of affairs is unlikely, the individuals added.

The preliminary deadline for banks to finalize their commitments for the refinancing was set for the top of May. However, some lenders have indicated they want extra time to safe inner credit score approvals, anticipating that they are going to be accomplished throughout the subsequent few weeks, the individuals stated.

The ongoing mortgage talks are one of many greatest refinancing efforts ever by a Hong Kong firm. A profitable deal would assist alleviate liquidity issues which have lengthy dogged the corporate. However, if talks falter and a deal isn’t sealed, that may imply extra uncertainties for New World and its bondholders, who may face better reimbursement dangers.

New World additionally has a number of bond coupon funds due in June that can be intently watched by traders. The builder had complete liabilities of HK$210.9 billion on the finish of December 2024 and in June it has a minimum of $116.6 million of coupon funds due, together with on 4 perpetual notes.

“There is a high likelihood that New World will successfully reach an agreement with banks,” stated Huan Li, co-founder of asset supervisor Forest Capital Hong Kong Ltd. It’s unusual for lenders to pressure an organization into default outright and if the negotiations fail, the corporate could proceed with a complete debt restructuring, he added. 

New World didn’t instantly reply to a request for remark.

The developer has been in discussions with banks since January, looking for to refinance its financial institution borrowings maturing this yr and past. In March, the corporate sweetened the phrases of the loans, including prized asset Victoria Dockside to a collateral pool that already had round 40 different properties in it.

New World lately determined to not difficulty a discover to redeem a $345 million perpetual bond earlier than a deadline that may set off increased curiosity funds, although it may nonetheless name the notice on the elevated price. It has a $999 million perpetual notice with an identical “coupon reset date” in June 2026.  

The 6.15% perpetual notes have dropped 19% to this point in May to round 62 cents on the greenback, set for the sharpest month-to-month decline since January, in keeping with Bloomberg-compiled information. Current bond costs seem to mirror expectations that the perpetuals is probably not referred to as, although near-term curiosity funds — together with step-up coupons — can be paid, Forest Capital’s Li added. 

New World is individually looking for to lift a further mortgage of as a lot as HK$15.6 billion utilizing Victoria Dockside as a first-ranking mortgage. 

–With help from Jackie Cai.

(Updates with feedback and bond costs within the sixth and tenth paragraphs.)

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