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Hong Kong property
BusinessBanking & Finance

New World touts US$4.5 bn in loans, debt payments since January as proof of funding health

  • Company aims to continue to ‘optimise its loan portfolio and seek low-cost onshore loans’ to control financing costs, it said

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Miami Quay, jointly developed by Wheelock Properties, Henderson Land, New World Development and Empire Group, at Kai Tak, Hong Kong, pictured on August 5, 2022. Photo: Jonathan Wong
Aileen Chuang

New World Development (NWD), the conglomerate owned by one of Hong Kong’s wealthiest families, said it has completed around HK$35 billion (US$4.5 billion) in “low-interest and long-tenure” loans and debt repayments since January.

NWD announced on Monday that it was able to secure multiple low-cost new loans to replenish its liquidity and increase the proportion of yuan loans to reduce overall financing costs. The average interest rate for its offshore loans was about 1.1 per cent above Hibor, the city’s interbank offered rate, while the selected onshore yuan loans were set at fixed rates of 3.0 per cent and 2.9 per cent. The one-month Hibor currently stands at 4.64 per cent.

“Given the volatile market environment, the group continued with its treasury management strategy to reduce interest costs, extend debt durations and mitigate risks related to foreign exchange and interest rate fluctuations,” the company said.

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The moves came as elevated US dollar interest rates have increased borrowing costs in Hong Kong, where the local currency is pegged to the US dollar. They also came amid sluggish sentiment in Hong Kong and mainland China’s property markets.
The city’s base rate remains at 5.75 per cent after the US Federal Reserve kept its target rate unchanged this month, with just one cut expected this year. The city’s six major lenders kept their key lending and deposit rates unchanged, meaning mortgage borrowers and companies face a longer wait for relief from high borrowing costs.
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NWD said more onshore yuan loans are under discussion after securing a 15-year facility of 2 billion yuan (US$275.5 million) at a fixed rate of 3.0 per cent and a 10-year loan of 600 million yuan at 2.9 per cent.

NWD also refinanced a hotel loan for a joint venture with Abu Dhabi Investment Authority for a total amount of HK$9.5 billion, of which HK$9.25 billion is the original loan amount and HK$260 million is new money.

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