New World Development's Critical Debt Test Looms Monday as $5.05 Million Bond Interest Due

HONG KONG, MONDAY - New World Development Co., the struggling Hong Kong developer that has been causing concern among investors by delaying some debt payments, is set to face a critical test on Monday when it must pay interest on a dollar bond worth $5.05 million.

The company, controlled by tycoon Henry Cheng's family empire, must meet its obligation of paying 5.875% interest on the bond due Monday, according to Bloomberg calculations. This interest payment comes at a tense time for investors, who are monitoring the deadline closely after New World recently delayed some debt payments on four perpetual notes.

The company's ability to honor this interest payment will be tested as it continues to grapple with HK$210.9 billion ($26.9 billion) of liabilities, making it the developer with the highest debt burden among major Hong Kong builders. A default on the bond could trigger an event of default and cause concerns about sluggish real estate market conditions that could have spillover effects.

New World's situation has caused concern among investors and analysts, who are monitoring its financial disclosure as the company prioritizes communication with banks during its loan talks. The firm has received written commitments for 87% of its refinancing target as it races to complete a HK$87.5 billion loan deal by the end of June.

Bondholders are becoming increasingly frustrated with New World's financial transparency, particularly after the company opted not to redeem a perpetual security last month. Meanwhile, lenders have warned investors that the only way for New World to handle its debt maturities and preserve equity value is through an extensive liability management exercise for its securities.

The interest payment due Monday on the dollar bond represents a critical test of New World's ability to manage its debt burden, and market analysts will be watching closely as the company navigates this challenging period.