Hong Kong builder New World makes progress escaping distress

[HONG KONG] New World Development, the Hong Kong property firm thatâs become emblematic of the cityâs efforts to shake off a property slump, has rallied on steps to shore up liquidity.Thatâs lifted some of its bonds out of distressed territory. Five out of its 11 US dollar notes issued before a key refinancing last year are trading between 77 US cents and 95 US cents, while several of its perpetual notes have posted gains of more than 200 per cent over the past 12 months. The rebound has helped make it the best-performing name in Bloombergâs Asia high-yield corporate index this year and last.Thatâs quite a contrast to a year ago, when all of its US dollar securities were trading below 50 US cents, levels generally indicating deep distress. What helped spark the turnaround was that around that time, New World pledged assets as collateral for a major loan refinancing that it closed at a record US$11 billion in June. The deal underscored progress in efforts to pull itself back from the brink of a deeper crisis.Its stock, meanwhile, has risen some 32 per cent in 2026 after surging about 40 per cent last year.The signs of growing investor confidence come as New World, one of Hong Kongâs largest developers, has launched an extensive programme of potential asset disposals. The company also told some investors in recent meetings that itâs pushing to achieve positive cash flow for the fiscal year ending June 2026.Even so, the company, controlled by billionaire Henry Chengâs family, still faces a barrage of challenges. Those include sluggish property prices, a thin pipeline of new developments and persistent concerns over the performance of its retail assets, including a mall near Hong Kong International Airport.âThe worst moment has passed for sure, and in the short-term we will not see a sudden liquidity crunch,â said Gary Ng, senior economist at Natixis. âBut it is still too early to say it is out of the woods and back to a healthy business.â Despite its efforts to offload assets, progress has been slow. Negotiations to sell the landmark K11 Art Mall have dragged on for more than a year amid valuation gaps. Discussions with the Airport Authority regarding the future of the 11 Skies complex remain unresolved.Other fundraising efforts have also stumbled. A plan by the Cheng family to bring in third-party investors to inject fresh capital into New World stalled late last year. And CTF Services, the familyâs infrastructure arm, put on hold the sale of a mainland Chinese toll-road portfolio valued at roughly US$2Â billion.The Cheng family is still seeking to sell some properties in its Rosewood Hotel Group, sources familiar said late last year. It agreed in December to sell its Australian power company Alinta Energy to Sembcorp Industries for US$4.3 billion in enterprise value. BLOOMBERG