On November 3, New World Development (“NWD”) announced an exchange offer that is applicable to all existing perpetual and fixed tenor USD bonds (excluding HKD bonds).
The company expects to issue no greater than USD 1.9 billion in new bonds, of which up to USD 1.6 billion of new perpetual bond. The exchange offer will only go through if the final issue sizes for the new perpetual bond and new fixed tenor bond reach USD 500 million and 100 million respectively.
For bondholders participating in the tender offer by November 17, 2025, can receive an early exchange consideration. For those participating by December 2, 2025, can receive only the base exchange consideration.
(The following information is for reference only and the details are subject to the original announcement.)
The Exchange Offer
The exchange offer will cover all 5 perpetual USD bonds and 6 fixed tenor USD bonds (the principal amounts are around USD 4.5 billion and 2.3 billion respectively). The details are shown below (see Table 1):
Table 1: Summary of the Exchange Offer
| Outstanding Amount (USD) | Early Exchange Consideration (per $100 of principal) | Base Exchange Consideration (per $100 of principal) | |
| Perpetual Bonds | |||
| NWDEVL 4.800% Perpetual Corp (USD) | 700 million | $50 of new perpetual bond* + $2 cash | $47 of new perpetual bond* |
| NWDEVL 6.250% Perpetual Corp (USD) | 1.3 billion | ||
| NWDEVL 10.131% Perpetual Corp (USD) (Previous coupon is 6.15%) | 350 million | ||
| NWDEVL 5.250% Perpetual Corp (USD) | 1 billion | ||
| NWDEVL 4.125% Perpetual Corp (USD) | 1.14 billion | ||
| Fixed Tenor Bonds | |||
| NWDEVL 4.750% 23Jan2027 Corp (USD) | 460 million | $91 of new fixed tenor bond + accrued interest | $88 of new fixed tenor bond + accrued interest |
| NWDEVL 5.875% 16Jun2027 Corp (USD) | 170 million | $90 of new fixed tenor bond + accrued interest | $87 of new fixed tenor bond + accrued interest |
| NWDEVL 8.625% 08Feb2028 Corp (USD) | 400 million | $90 of new fixed tenor bond + accrued interest | $87 of new fixed tenor bond + accrued interest |
| NWDEVL 4.125% 18Jul2029 Corp (USD) | 720 million | $77.5 of new fixed tenor bond + accrued interest | $73.5 of new fixed tenor bond + accrued interest |
| NWDEVL 4.500% 19May2030 Corp (USD) | 440 million | $76.5 of new fixed tenor bond + accrued interest | $72.5 of new fixed tenor bond + accrued interest |
| NWDEVL 3.750% 14Jan2031 Corp (USD) | 76 million | $71.5 of new fixed tenor bond + accrued interest | $67.5 of new fixed tenor bond + accrued interest |
| * All accrued and unpaid interest of perpetual bonds will be forfeited Source: Company Announcements Data as of 3 November 2025 | |||
Below are the details of the new perpetual bond and new fixed tenor bond (see Table 2):
Table 2: Details of New Perpetual Bond and New Fixed Tenor Bond
| New Perpetual Bond | New Fixed Tenor Bond | |
| Issuer | CS Treasury Management Services (P) Limited | CS Treasury Management Services (B) Limited |
| Tenor | / | 6 Years (Matured in 2031) |
| Coupon Rate | 9% | 7% |
| Coupon Reset Feature | Coupon step-up by 3% if not called by end of Year 6 | / |
| Source: Company
Announcements Data as of 3 November 2025 |
||
It should be noted that the two new bonds are issued by wholly-owned subsidiaries of NWD. However, unlike the existing bonds that are directly guaranteed by NWD, these subsidiaries will extend a loan to Cosmostar Holding Ltd, the owner of Victoria Dockside (“VD”), to acquire the rights to claim against VD assets (the loan is also guaranteed by NWD and VD). Nevertheless, the two new bonds are not guaranteed by NWD and will not be secured by the loan.
According to previous agreement, the total permitted indebtedness secured with VD is USD 2 billion. Considering that the company has already obtained about USD 500 million in a facility agreement backed by VD on September 25, this exchange offer arrangement will utilize the remaining approximately USD 1.5 billion, but it should be noted that the bank facility holds priority over the two new bonds in enforcing collaterals.
Commentary
After the announcement of exchange offer, the prices of different NWD’s USD bonds did not move significantly (see Table 3).
Table 3: Indicative Price for NWD’s USD Bonds
| Bond Name | Coupon Reset Feature | Post-Announcement Price | Pre-Announcement Price |
| NWDEVL 4.800% Perpetual Corp (USD) | No | $44 | $41.5 |
| NWDEVL 6.250% Perpetual Corp (USD) | No | $44 | $42.5 |
| NWDEVL 10.131% Perpetual Corp (USD) | Yes | $53.5 | $56 |
| NWDEVL 5.250% Perpetual Corp (USD) | Yes | $45.5 | $47 |
| NWDEVL 4.125% Perpetual Corp (USD) | Yes | $44 | $43.5 |
| NWDEVL 4.750% 23Jan2027 Corp (USD) | / | $89.5 | $89.5 |
| NWDEVL 5.875% 16Jun2027 Corp (USD) | / | $88.5 | $88.5 |
| NWDEVL 8.625% 08Feb2028 Corp (USD) | / | $88.5 | $88.5 |
| NWDEVL 4.125% 18Jul2029 Corp (USD) | / | $75.5 | $74.5 |
| NWDEVL 4.500% 19May2030 Corp (USD) | / | $73.5 | $73 |
| NWDEVL 3.750% 14Jan2031 Corp (USD) | / | $69 | $68.5 |
| Source:
iFAST Data as of 3 November 2025 |
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Since this exchange offer treats all perpetual bonds equally, it is more favorable to holders of the two fixed-for-life perpetual bonds, explaining the small price increase.
Overall, this exchange offer involves swapping existing perpetual bonds for new perpetual bonds while forfeiting all accrued and unpaid interest. For fixed tenor bonds, the arrangement effectively serves as a maturity extension. Despite the relatively high coupon rate for the two new bonds, the significant principal haircut gives bondholders little incentive to accept the exchange offer.
However, the above is based on an assumption that NWD can successfully repay the existing bonds, and we think this exchange offer somehow shows the company’s lack of confidence in achieving that. Therefore, the credit enhancement measures linked to VD provided by the two new bonds may carry some significance under this situation.
Compared with the existing bonds that are directly guaranteed by NWD, the two new bonds involve loans made by the issuers to Cosmostar, which are also guaranteed by both NWD and VD. Currently NWD has the estimated value of VD at USD 8.6 billion, which implies a loan-to-value (LTV) ratio of only 23.2% based on the total permitted indebtedness of USD 2 billion. Thus, even if we take a big discount for its actual value, the new bonds could still offer some margin of safety. Furthermore, because the issue structure of the new perpetual bond is different, its coupon payment will not be bounded by the dividend stopper clause from the existing perpetual bonds.
But looking from another angle, if the exchange offer is successfully completed, NWD will be able to reduce more than USD 1.6 billion debts in perpetual bond, as well as USD 50 million debts in fixed tenor bonds (assuming the average principal haircut is 17%). This would certainly ease the repayment pressure on the outstanding bonds, which we believe is an important consideration for bondholders.
Last but not least, since the maximum issue size for the new perpetual bond is USD 1.6 billion, it means that the issue size of new fixed tenor bond may only be USD 300 million. These amounts represent approximately 70% and 15% of the outstanding principal (post-haircut) of the existing bonds respectively. Therefore, even if bondholders accept the exchange offer, they may not necessarily receive full allocation. Investors who opt for early exchange consideration will have the priority for allocation, on a pro-rated basis.
Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold a NIL position in the abovementioned securities.
