BAF NEWS

Background and Market Context

Hong Kong’s New World Development faces a difficult property and financing environment. The company frames the exchange as a way to “enable significant deleveraging immediately” and strengthen liquidity, according to its HKEX filing. Therefore, balance sheet repair has become a near term priority.

Reuters notes the exchange targets a large perpetual stockpile, roughly US$4.5 billion. The plan aims to trim that by about one third while easing near term funding strain.

Details of the Exchange Offers

NWD launched parallel exchange offers across its perpetual securities and several U.S. dollar senior notes. The goal is immediate deleveraging and more cash flexibility, per Reuters and the filing. Zoom in: early tenders in perpetuals are intended to be accepted in full, subject to conditions.

Additionally, the filing extended the early exchange economics by updating the base exchange consideration. This move kept incentives aligned through the remainder of the offer window.

Debt Reduction Impact

After the early deadline, the company expects to cut about US$1.3 billion of debt. Moreover, the filing shows early settlement cuts of US$1.02 billion in perpetuals and US$29.9 million in senior notes. Consequently, most of the initial relief comes from perpetuals. Final totals will depend on additional tenders before expiry.

By the numbers:

• US$1.3 billion expected debt reduction after the early deadline.
• US$1.02 billion early settlement reduction in perpetuals.
• US$29.9 million early settlement reduction in senior notes.
• Up to US$1.6 billion new 9% perpetuals on offer, with haircuts.
• Additionally, the exchange offers expire December 2, 2025.

Key Terms for Perpetual Bondholders

Perpetual holders can swap existing instruments into new 9% perpetual bonds. The general haircut is 53%. However, early tenders face a 50% haircut and receive US$20 cash per US$1,000 tendered.

Key Terms for Senior Noteholders

Senior noteholders can exchange into new 7% notes due 2031. Haircuts range from 12% to 32.5%, depending on the series. Additionally, the new issuance is capped at US$300 million, covering part of about US$2.3 billion outstanding.

Timeline and Mechanics of the Exchange

The early tender deadline occurred at 5:00 p.m. New York time on November 17, 2025. Early payment is expected on November 20 for accepted early tenders.

Moreover, tenders “may not be revoked, except in certain limited circumstances,” according to the filing. Meanwhile, the exchange offers remain open until December 2, 2025.

Prior Steps to Bolster Liquidity

Earlier this year, NWD deferred US$77.2 million of coupon payments on four perpetual bonds, Reuters reported. Additionally, the developer secured an HK$88.2 billion refinancing package, or about US$11.24 billion. Separately, it added a US$760 million loan to support its balance sheet.

These moves, together with the exchange, form a broader liquidity plan. For now, the company is prioritizing balance sheet stability.

The upshot:

• Deleveraging is immediate and material, led by perpetual reductions.
• Liquidity support continues through refinancing and new issuance.
• However, haircuts are sizable, which may influence participation.
• Final deleveraging depends on take up by remaining holders.
• Market conditions remain challenging, limiting easy exits.

What’s next:

• Early payment for accepted early tenders is expected on November 20.
• Meanwhile, the exchange window stays open until December 2.
• Next, investors will track acceptance rates and any changes to terms.

Disclaimer: This article is for informational purposes only and does not constitute investment, legal, or tax advice. Credit and bond investments involve risk, and readers should conduct their own research.