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Yahoo
14 hours ago
- Business
- Yahoo
New World's distress worsens after shock delay on bond interest
New World, which is grappling with HK$210.9 billion of liabilities, said in a filing late Friday that it's planning the deferment for coupons on four perpetual notes. Hong Kong developer New World Development is sliding deeper into distress after jolting investors by delaying interest payments on some bonds, marking the latest flashpoint in a years-long crisis in China's property market. New World, which is grappling with HK$210.9 billion ($34.67 billion) of liabilities, said in a filing late Friday that it's planning the deferment for coupons on four perpetual notes. In total, that means it's postponing US$77.2 million of debt obligations, according to Bloomberg calculations. The bonds concerned slid to record lows. Its 6.15% perpetual notes dropped about 3 US cents to 23 US cents on the dollar after tumbling more than 30 US cents on Friday, on pace for its lowest level since issuance. Its 4.8% perpetual securities fell 10 US cents to 15.5 US cents, also on track for a record low and the biggest daily decline since October 2022. Its shares slid as much as 11%, the biggest intra-day drop in about two months. 'While this will not trigger a default, the total amount to be repaid will pile up so the headwind should remain in the long run,' said Jeff Zhang, an analyst at Morningstar. A company spokesperson said Friday that the company was continuing 'to manage its overall financial indebtedness whilst taking into account the current market volatility and continues to comply with its existing financial obligations'. While the market moves on Monday underscore how investor unease is worsening, there have also been some more positive developments for the builder, which is controlled by the family empire of tycoon Henry Cheng. Bloomberg reported earlier Monday morning that as of May 30 the company had received written commitments from banks for 60% of HK$87.5 billion of loan refinancing that it's seeking by the end of June, according to people familiar with the matter. New World didn't immediately respond to a request for comment Monday morning. The company also said Friday that total contracted sales year-to-date amount to about HK$24.8 billion, representing over 95% of the annual sales target, according to its monthly business update. But markets clearly need more certainty on debt repayment plans after a years-long property slump in the city and mainland China has left New World with one of the highest debt burdens of any Hong Kong developer. Investors have also become increasingly sceptical after New World reported its first loss in 20 years for the financial year ended last June. The company's stock is trading at a price-to-book ratio of just 0.06x, with a market capitalisation of US$1.4 billion versus about US$17 billion at its peak in 2019. See Also: Click here to stay updated with the Latest Business & Investment News in Singapore New World Development defers perpetual bond coupon payments Hong Kong bankers sweat US$11 billion New World refinancing New World Development's billionaire Cheng family in talks with Louis Vuitton on mega Hong Kong store Read more stories about where the money flows, and analysis of the biggest market stories from Singapore and around the World Get in-depth insights from our expert contributors, and dive into financial and economic trends Follow the market issue situation with our daily updates Or want more Lifestyle and Passion stories? Click here
Yahoo
3 days ago
- Business
- Yahoo
$28 Billion Shock: Hong Kong Giant Defers Debt Payments, Investors Blindsided
New World Development (NDVLY) has just reignited investor anxiety in Asias battered property sector. On the eve of Hong Kongs Dragon Boat Festival, the company quietly dropped news its pushing back coupon payments on four of its perpetual bondstotaling roughly $77.2 million. While this doesnt count as a technical default, the timing and lack of prior signals caught creditors off guard. Shares tumbled as much as 11% before closing down 6.5%, and its 4.8% perpetuals slid to just over 60 cents on the dollar before clawing back slightly. Several fixed-income desks scrambled late Friday, fielding urgent calls from senior PMs seeking clarity on what just happenedand why they werent warned sooner. Warning! GuruFocus has detected 8 Warning Signs with NDVLY. The developer, grappling with HK$220 billion ($28 billion) in liabilities, said the deferment is part of a broader effort to manage debt amid market volatility. But skepticism is rising. Morningstars Jeff Zhang noted the move, though not a default, adds to the future repayment burden. Nomura analysts called the action a credit negative, and floated the possibility of selective bond repurchases to ease pressure. Bondholder discussions with PJT Partners reportedly continue behind the scenes, though no formal action has been proposed. Its a stark reminder of the fragility still lingering in Hong Kongs real estate landscape, where rising vacancies and softening rents are squeezing even the most storied names. There is, however, a thread of optimism. As of late May, New World had reportedly secured commitments for around 60% of the HK$87.5 billion in refinancing its targeting by end-June. Management expects more progress after the public holiday. On the sales front, year-to-date property sales have already hit 95% of its full-year goal, according to its latest business update. Still, with a share price trading at just 0.07 times book and a market cap of $1.4 billiondown from $17 billion in 2019investors will likely need more than sales milestones to regain confidence. The next few weeks could determine whether this is a short-term scare or the start of something deeper. This article first appeared on GuruFocus.
Business Times
3 days ago
- Business
- Business Times
New World's distress worsens after shock delay on bond interest
[HONG KONG] Hong Kong developer New World Development is sliding deeper into distress after jolting investors by delaying interest payments on some bonds, marking the latest flashpoint in a years-long crisis in China's property market. New World, which is grappling with HK$210.9 billion (S$272 billion) of liabilities, said in a filing late on Friday (May 30) that it's planning the deferment for coupons on four perpetual notes. In total, that means it's postponing US$77.2 million of debt obligations, according to Bloomberg calculations. The bonds concerned slid to record lows. Its 6.15 per cent perpetual notes dropped about 3 US cents to 23 US cents on the US dollar after tumbling more than 30 US cents on Friday, on pace for its lowest level since issuance. Its 4.8 per cent perpetual securities fell 10 US cents to 15.5 US cents, also on track for a record low and the biggest daily decline since October 2022. Its shares slid as much as 11 per cent, the biggest intraday drop in about two months. 'While this will not trigger a default, the total amount to be repaid will pile up so the headwind should remain in the long run,' said Jeff Zhang, an analyst at Morningstar. A company spokesperson said on Friday that the company was continuing 'to manage its overall financial indebtedness whilst taking into account the current market volatility and continues to comply with its existing financial obligations'. While the market moves on Monday underscore how investor unease is worsening, there have also been some more positive developments for the builder, which is controlled by the family empire of tycoon Henry Cheng. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up Bloomberg reported earlier Monday morning that as at May 30, the company had received written commitments from banks for 60 per cent of HK$87.5 billion of loan refinancing that it's seeking by the end of June, according to sources familiar with the matter. New World did not immediately respond to a request for comment on Monday morning. The company also said on Friday that total contracted sales year-to-date amount to about HK$24.8 billion, representing over 95 per cent of the annual sales target, according to its monthly business update. But markets clearly need more certainty on debt repayment plans after a years-long property slump in the city and mainland China has left New World with one of the highest debt burdens of any Hong Kong developer. Investors have also become increasingly sceptical after New World reported its first loss in 20 years for the financial year that ended last June. The company's stock is trading at a price-to-book ratio of just 0.06, with a market capitalisation of US$1.4 billion versus about US$17 billion at its peak in 2019. BLOOMBERG
Straits Times
4 days ago
- Business
- Straits Times
HK property giant New World's distress worsens after shock delay on bond interest
A years-long property slump has left New World with one of the highest debt burdens of any Hong Kong developer. PHOTO: ST FILE – Hong Kong developer New World Development is sliding deeper into distress after jolting investors by delaying interest payments on some bonds, marking the latest flashpoint in a years-long crisis in China's property market. New World, which is grappling with HK$210.9 billion (S$34.7 billion) of liabilities, said in a filing late on May 30 that it is planning the deferment for coupons on four perpetual notes. In total, that means it is postponing US$77.2 million (S$99.6 million) of debt obligations, according to Bloomberg calculations. The bonds concerned slid to record lows. Its 6.15 per cent perpetual notes dropped about three cents to 23 cents on the dollar on June 2 after tumbling more than 30 cents on May 30, on pace for its lowest level since issuance. Its 4.8 per cent perpetual securities fell 10 cents to 15.5 cents, also on track for a record low and the biggest daily decline since October 2022. New World shares slid as much as 11 per cent, the biggest intraday drop in about two months. 'While this will not trigger a default, the total amount to be repaid will pile up, so the headwind should remain in the long run,' said Morningstar analyst Jeff Zhang. A company spokesperson said on May 30 that the company was continuing 'to manage its overall financial indebtedness while taking into account the current market volatility, and continues to comply with its existing financial obligations'. While the market moves on June 2 underscore how investor unease is worsening, there have also been some more positive developments for the builder, which is controlled by the family empire of tycoon Henry Cheng. Bloomberg reported earlier on June 2 that as at May 30, the company had received written commitments from banks for 60 per cent of HK$87.5 billion of loan refinancing that it is seeking by the end of June, according to people familiar with the matter. The company also said on May 30 that total contracted sales year to date amount to about HK$24.8 billion, representing over 95 per cent of the annual sales target, according to its monthly business update. But markets clearly need more certainty on debt repayment plans after a years-long property slump in the city and mainland China has left New World with one of the highest debt burdens of any Hong Kong developer. Investors have also become increasingly sceptical after New World reported its first loss in 20 years for the financial year ended last June. The company's stock is trading at a price-to-book ratio of just 0.06, with a market capitalisation of US$1.4 billion versus about US$17 billion at its peak in 2019. BLOOMBERG Join ST's Telegram channel and get the latest breaking news delivered to you.
Business Times
29-04-2025
- Business
- Business Times
China Vanke's quarterly loss widens to 6.25 billion yuan after overhaul
[NEW YORK] China Vanke's first-quarter loss widened, underscoring the property developer's challenges even after the government in its hometown of Shenzhen stepped in to take control of operations. The company reported a net loss of 6.25 billion yuan (S$1.1 billion) in the three months ended in March, steepening from a 362 million yuan loss a year earlier, according to a Hong Kong exchange filing on Tuesday (Apr 29). The loss stemmed mainly from declines in home settlements and gross margins, Vanke said in the filing. Margins dropped to 6.1 per cent from about 10 per cent last year, according to Bloomberg calculations on reported figures. As part of a government-led overhaul in January, Vanke's two top executives stepped down and an official from Shenzhen Metro Group, its largest state shareholder, took over as chair. The loss followed significant write-offs in the final quarter last year. Bloomberg Intelligence (BI) said Vanke's contracted sales risk dropping 30 per cent this year due to weakening buyer confidence and a shrinking supply pipeline, according to a note earlier this month. 'This could result in a 74 billion yuan shortfall in its sales proceeds this year versus last year,' Kristy Hung, a property analyst at BI, wrote in the note. 'A deepening cash crunch raises the stakes in any rescue.' A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up Other key figures: Revenue declined 38 per cent to 38 billion yuan Total cash slipped to 75.5 billion yuan from 88.2 billion yuan at end-2024 Vanke's sold but unbuilt inventory was worth about 219 billion yuan at the end of March Liquidity support Shenzhen Metro plans to lend Vanke 3.3 billion yuan to help it repay bonds in the open market. The loan, with a three-year term, charges a floating rate that stands at 2.34 per cent as at Tuesday. The developer also plans to sell some treasury shares to replenish liquidity. Vanke has 26.3 billion yuan of onshore and offshore bonds maturing this year, Bloomberg-compiled data showed. 'This year should remain tough for Vanke's earnings due to subdued profitability of presold projects in prior years and increased asset impairments,' said Jeff Zhang, an analyst at Morningstar. 'However, we expect a bottom-line turnaround in 2026 as the gross margins of projects acquired since 2022 have improved materially.' BLOOMBERG
