Standard Chartered Sells Notes Linked to New World Development

Standard Chartered Plc (STAN) sold the first structured notes in three years tied to the debt of New World Development Co. (17), the Hong Kong builder controlled by billionaire Cheng Yu-tung.

The bank raised $21.5 million from five deals linked to the company’s Sherson Ltd. subsidiary since July 31, according to data compiled by Bloomberg. The one-year notes pay a coupon of 1.5 percent to 2 percent. Valerie Tay, a spokeswoman for Standard Chartered in Singapore, declined to comment on the notes.

New World, which focuses on selling more affordable properties to local buyers, is set to outperform rivals as the government seeks to cool the world’s most expensive housing market, according to Adrian Ngan, an analyst at Citic Securities International in Hong Kong. Measures to curb home prices mainly affect higher-value residential properties developed by rivals such as Sun Hung Kai Properties Ltd. (16), he said.

“Although we are generally cautious towards Hong Kong’s residential property market, New World’s projects on hand are primarily catering for first-time end-users,” said Ngan. “Therefore, the company should be able to achieve better property sales than its peers who are focusing more on high-end residential units.”

Since taking over as Hong Kong’s chief executive last July, Leung Chun-ying has imposed extra taxes on non-resident home buyers, doubled the stamp duty on property transactions, and raised the minimum deposit required for a mortgage.

Cooling Measures

The tighter regulations pushed property transactions in the city to a two-decade low in the second quarter, easing prices that have more than doubled since early 2009 as a result of wealthy mainland Chinese buyers, near record-low interest rates and a lack of new supply.

Credit-linked notes can have higher yields and tailored maturities that may not be available in the bond market. Buyers of the securities, which include private banks and wealthy individuals, typically suffer losses if the issuing bank or the linked entity defaults.

To contact the reporter on this story: Alastair Marsh in London at amarsh25@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net

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