China’s Central Regulators Ask Big 4 Banks to Explore Additional Financing Support for New World Development

Chinese regulators held meetings last month in which they asked the country’s big four banks – Agricultural Bank of China, Bank of China, China Construction Bank and Industrial and Commercial Bank of China – to find ways to give additional financing to Hong Kong property developer New World Development, said three sources familiar with the matter.

The big four were contacted by the central government in February, asking them to maintain their existing credit lines to New World and to consider providing new financings, said all three sources. The banks are reviewing their current exposure to New World and evaluating possible increases on their exposures to existing financings, two of the three sources said.

The intervention from central government officials on the iconic Hong Kong developer underlines the deeper concern that New World’s collapse, at a time when the city’s real estate sector is teetering, could lead to a wider correction in Hong Kong’s property space.

As reported, The Hong Kong Monetary Authority – the city’s banking regulator – has also been directly engaged in pushing forward refinancing discussions for New World.

New World is controlled by the family of Hong Kong tycoon Henry Cheng Kar-Shun via its Chow Tai Fook Enterprises flagship holding company. Mainland government officials also held meetings with Henry Cheng, in which they urged him to avoid a restructuring process on New World, as such a move could also deepen the malaise in Hong Kong’s property sector, two of the three sources said.

In its talks with its bank lenders, New World Development has been at pains to stress that ongoing negotiations around its loan debt are a refinancing, not a restructuring. It has also said it plans to redeem all of its straight bonds on time and to make bond interest payments on time, as reported.

As Octus reported on March 7, China’s representative office in Hong Kong – The Liaison Office of the Central People’s Government – has also encouraged Mainland-based bank lenders of New World to continue supporting the property company and its controlling shareholder family. The main request to banks from the liaison office was that they agree to New World’s ongoing loan refinancing proposal.

New World submitted to bank lenders in mid-February an updated refinancing proposal seeking to roll all its unsecured loans due in 2025 and 2026 and bank-issued performance bonds into a HKD 60 billion-equivalent ($7.72 billion), three-year secured facility backed by a HKD 120 billion collateral package.

The company has told lender banks that it aims to complete the refinancing of its bank loans before the end of the first half of 2025, as reported.

New World, BOC, ICBC, CCB and ABC did not respond to requests for comment. Henry Cheng could not be reached for comment. China’s State Council’s Information Office did not respond to an emailed request for comment.