**Title:** Bondholders Frustrated as New World Development Prioritizes Banks
**Meta Description:** New World Development’s bondholders express frustration over limited financial disclosures as the company focuses on bank negotiations for loan refinancing.
**URL Slug:** new-world-development-bondholders-frustration
**Headline:** Bondholders Express Frustration as New World Development Focuses on Bank Negotiations
New World Development Co. is facing mounting frustration from its bondholders due to a lack of financial transparency as the cash-strapped developer prioritizes communication with banks during critical loan negotiations. The Hong Kong-based company has less than three weeks to finalize an HK$87.5 billion ($11.2 billion) loan refinancing deal before a covenant waiver expires at the end of the month.
Debt advisers have indicated that a liability management exercise on the bonds may be the only viable option for New World to maintain equity value. They are urging bondholders to unite against such measures. As this situation unfolds, bondholders are increasingly concerned about the lack of information, leaving them desperate for insights to inform their trading decisions. Several bondholders, who requested anonymity, reported difficulties in obtaining updates from New World regarding its plans to address a liquidity crisis exacerbated by a market downturn.
In contrast, some banks have received cash flow projections from the company, detailing its planned debt payments over the next three years. While this selective communication can frustrate bondholders, it is not unusual for distressed companies to prioritize their relationships with bank lenders. Banks often have better access to financial information through loan covenants, while unsecured bondholders typically rely on public disclosures.
Adding to the bondholders’ concerns, New World’s perpetual bonds have seen an average decline of over 40% in value over the past three months. According to debt adviser PJT Partners Inc., the company’s next steps could further impact bondholders negatively. During a recent call, PJT indicated that New World might pursue discounted exchanges as part of a potential liability management strategy. If this occurs after the loan refinancing, recovery ratios for unsecured bond investors could drop significantly from 68% to 30%.
Frustration among bondholders intensified following New World’s decision to delay interest payments on perpetual notes, a move that surprised many investors. Some bondholders had been reassured in February by Chief Financial Officer Edward Lau, who stated that net cash flow from operations was nearly sufficient to cover capital expenditures, net interest expenses, and coupon payments on perpetual bonds.
Many bondholders have encountered challenges in obtaining information from the company, with messages to New World’s investor relations manager going unanswered. As a result, some have resorted to closely monitoring news reports to stay informed about the company’s situation. Meanwhile, New World has been actively engaging with over 50 banks as it works to finalize its refinancing efforts.
**FAQ Section:**
**Q: What are the main concerns of New World Development’s bondholders?**
A: Bondholders are primarily concerned about the lack of financial transparency from New World Development, especially as the company prioritizes communication with banks during critical loan negotiations. They are also worried about the significant decline in the value of the company’s perpetual bonds and potential future liability management exercises.
