New World Faces Key Test With Bond Interest Payment Due

New World Development, the distressed Hong Kong property giant that has unsettled investors by delaying some debt payments, was set to face a critical test on June 16 when interest was due on a US dollar bond.

- 

HONG KONG -

The company, controlled by the family empire of tycoon Henry Cheng, must pay the US$5.05 million (S$6.5 million) on the 5.875 per cent security, according to Bloomberg calculations. Investors were closely monitoring the deadline after the builder recently jolted creditors by using an option to defer coupon payments on four perpetual notes.

The interest due on June 16, however, is on a regular bond that does not carry such an option to push back payments.

An event of default could be triggered if New World fails to honour the coupon within 14 days of the due date, according to an offering document seen by Bloomberg News. Generally in credit markets, it can sometimes take two to three days for dollar bondholders to receive interest payments once they are initiated.