HK's Mid-Sized Developers Face Extra Bank Scrutiny

With $28b in Debt, They Are Hit by High Interest Rates and Plunging Asset Values Amid Property Downturn

- 

HONG KONG - While New World Development's mounting debt has captured market attention and shaken one of Asia's wealthiest families, Hong Kong's smaller property firms have lenders on even higher alert.

Banks are tightening the screws on mid-sized developers that have at least HK$173 billion (S$28 billion) in debt.

They are demanding stricter refinancing terms, asking for credit enhancements such as collateral or guarantees, and, increasingly, halting new lending altogether, according to people familiar with the matter.

Local developer Lai Sun Development is facing extra bank scrutiny as it seeks to refinance an October loan, said the sources.

Wang On Properties was forced to offer credit enhancements to banks because of cash flow concerns, other sources added.

The shift underscores growing caution in a sector long regarded as a cornerstone of Hong Kong's economy.

Smaller and mid-sized developers are being squeezed by a mix of high interest rates and plunging asset values, the result of Hong Kong's deepest property downturn in decades.

As these firms slash spending and rush to offload assets, the fallout is beginning to reverberate beyond their balance sheets.