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.
“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.
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.
The firm will continue to “optimise its loan portfolio and seek low-cost onshore loans” to control financing costs and maintain a solid financial position, it said.
Amid weak property demand and consumption behaviour in mainland China and Hong Kong, NWD said its gearing ratio may not see material improvement in the near term, according to a note from Morningstar on June 21.
“Nonetheless, [NWD] is more optimistic about the property market’s secular trend, given lower interest rates and a revival in homebuyer sentiment prospects in both regions, which should enhance NWD’s financial strength,” analyst Jeff Zhang wrote.
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Sonia Cheng speaks about family legacy, brand tradition and first-ever transformation
Sonia Cheng speaks about family legacy, brand tradition and first-ever transformation
NWD has set an ambitious target of reducing its gearing ratio to below 40 per cent by 2027, from the current level of around 50 per cent. Its net debt of HK$118.9 billion as a percentage of equity rose to 49.9 per cent in December from 48.7 per cent in June last year, despite measures to trim capital spending and administrative costs.