$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.

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Yahoo

3 hours ago

• Yahoo

IBM (IBM) Hits New Record; BofA Sees More Upside With $320 Price Target

Shares of International Business Machines (IBM, Financials) continued their rally Wednesday, climbing about 1% to $285.83 and setting up a third consecutive record-high close. The stock is up nearly 33% year to date, with Bank of America analysts saying the run isn't over. Warning! GuruFocus has detected 4 Warning Signs with NVDA. In a client note, BofA raised its price target on IBM from $290 to $320, citing strong momentum in artificial intelligence and quantum computing. The firm called IBM a defensive investment with improving revenue growth and rising cash flow potential. The new target is well above the $261 consensus among analysts tracked by Visible Alpha. The upgrade came as IBM launched new AI software designed to help companies scale their AI agent systems responsibly. Earlier this month, the company also reiterated its belief that it is on track to deliver a large-scale fault-tolerant quantum computer by the end of the decade. This article first appeared on GuruFocus.

Business Insider

8 hours ago

• Business Insider

HKR International Limited (HKR) Receives a Buy from DBS

In a report released today, Jeff Yau from DBS maintained a Buy rating on HKR International Limited (HKR – Research Report), with a price target of HK$1.19. The company's shares closed last Wednesday at €0.08. Confident Investing Starts Here: Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions Receive undervalued, market resilient stocks right to your inbox with TipRanks' Smart Value Newsletter Yau covers the Real Estate sector, focusing on stocks such as Sun Hung Kai Properties, Henderson Land Development Co, and Hongkong Land Holdings. According to TipRanks, Yau has an average return of 2.0% and a 68.48% success rate on recommended stocks. The word on The Street in general, suggests a Moderate Buy analyst consensus rating for HKR International Limited with a €0.13 average price target.

Bloomberg

11 hours ago

• Bloomberg

New World's Bond Prices Surge as It Nears Refinancing Deal

New World Development Co. 's dollar bonds are poised to hit their highest levels this month as the company closes in on a crucial loan refinancing deal. The indebted Hong Kong builder's bonds were up 2 to 3 cents across maturities Friday morning, according to traders. A senior note maturing in 2027 rose nearly 3 cents to 71 cents on the dollar, on pace for its highest level since May 30, when the company said it would delay interest payments on four of its perpetual bonds.