"Big Banks" Bank of America Securities: New World delivers perpetual bond interest, stock price will react negatively

Bank of America Securities published a research report indicating that New World Development (00017.HK) has recently made progress in refinancing bank loans. The group announced that its contract sales in mainland China and Hong Kong have reached a cumulative total of HKD 24.8 billion, achieving over 95% of its full-year target. However, after the market closed last Friday (May 30), it announced a delay in the interest payments for four perpetual securities, which was unexpected by the market. Bank of America stated that although the deferral does not constitute a default and is understood to be in response to bank requirements, it believes the incident may exacerbate investors' concerns about its liquidity situation and asset disposal, and expects the stock price to react negatively.

Bank of America maintains a "underperform" rating on New World, with a target price of HKD 3.4. It estimates that the group's bonds maturing in 2027 will amount to USD 630 million and believes that New World may need to conduct debt management operations in 2027 if its subsidiaries are still unable to generate more cash, which could put pressure on liquidity