A Hong Kong Property Dynasty’s Perpetual Dilemma
Investors worry that New World Development may not call its perpetual notes, or worse, defer coupon payments.
A test of faith for New World Development.
Photographer: Leung Man Hei/BloombergWith a persistent property downturn, money is tight for some of Hong Kong’s most indebted real estate developers. Bankers are nervous, while a fire sale of valuable assets is never a good option. The question now is how the city’s tycoon families will manage their financial interests, and whether they will take actions at the expense of some creditors.
On Nov. 8, Hong Kong-listed Road King Infrastructure Ltd. said it would not distribute its coupon on a 7.75% perpetual bond, reigniting discussions on the nature of this financial instrument. In particular, the spot is back on the Cheng family, whose empire spans property flagship New World Development Co. and retail jeweler Chow Tai Fook Jewellery Group Ltd. New World has about $4.5 billion worth of perpetuals outstanding.