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Hong Kong's New World Development has secured around HKD88 billion (USD11-11.3 billion) in refinancing this past week, one of the largest loan deals in the city's history. After months of tense negotiations, lenders have backed a multi-tranche facility extending maturities to mid-2028. With high exposure to mainland projects and steep interest costs, the loan lifeline is crucial in pulling the developer back from default risk. CEO Echo Huang emphasised that the support reflects confidence in the firm's strategy, which prioritises debt reduction and cash flow improvement. The refinancing provides vital breathing room amid the property downturn.
New World Development has successfully secured a sweeping refinancing deal worth HKD88.2 billion (approx. USD11.3 billion), cementing critical support from its consortium of lenders in what is being viewed as a decisive step toward resolving its mounting debt burden. The facility includes multiple tranches and extends the company's debt maturities until mid-2028, replacing a significant chunk of offshore unsecured debt and short-term bank borrowings. Advertisement
The announcement followed tense negotiations over the past few months, as the developer battled rising interest costs and limited liquidity. According to CEO Echo Huang, this level of lender commitment underscores institutional faith in the company's ongoing strategy to trim debt and stabilise cash flow. Bankers familiar with the deal cited it as one of the largest commercial property refinancing packages in Hong Kong's history.
This financing breakthrough came just after the company narrowly made a dollar bond interest payment late last week, sidestepping potential default. Previously, New World had already delayed paying USD77.2 million in coupons on its perpetual bonds earlier this year. These repeated delays had intensified scrutiny from rating agencies and investors alike, particularly as the company's interest payments had exceeded operating profits during the second half of last year.
At the heart of New World's struggle lies its exposure to mainland China's weakened real estate sector. The company's ambitious mainland expansion over the last decade added substantial leverage to its books. Projects such as the 11 Skies mega-mall near the Hong Kong International Airport and a mixed-use complex in Shenzhen faced slower-than-expected returns due to declining tourism, weak retail demand, and broader macroeconomic pressures.
The refinancing comes after New World reported its first full-year loss in two decades. Former CEO Adrian Cheng, who led the company during this aggressive expansion phase, stepped down earlier this year. Under the leadership of Chairman Henry Cheng and newly appointed CEO Echo Huang, the company is now doubling down on financial discipline cutting non-core assets, slowing down new launches, and strengthening operational efficiency.
Sources indicate that banks such as HSBC and Bank of China played a key role in pushing the deal over the line before the end of June a timeline that, if missed, could have derailed the entire refinancing arrangement. With commercial real estate loans comprising a significant portion of the group's borrowings, this timely resolution also helps reduce systemic risk concerns in the broader Hong Kong credit market.
New World's total net debt had climbed to nearly HKD124-146 billion prior to this refinancing, and its removal from the Hang Seng Index last year further damaged investor confidence. The successful closure of this deal offers a crucial window for the company to recalibrate, even as market conditions remain volatile.
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