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<Research>UBS Sets NWD's TP at HKD4; Focus on Group's Decision to Redeem Perpetual Bonds or Not
Recommend 10 Positive 12 Negative 8 |
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NEW WORLD DEV (00017.HK) still has USD345 million in outstanding perpetual bonds, and tomorrow (16th) is the redemption deadline, according to a report from UBS. If the perpetual bonds are not redeemed, the coupon rate will rise from 6.15% to 10.2%, which is expected to have a negative impact on the share price. At the same time, NEW WORLD DEV has the option to defer all perpetual bond interest payments on June 9. In this scenario, the group could save HKD1.9 billion in annual cash interest expenses and improve its ability to service debt or interest payments to bondholders and banks. If NEW WORLD DEV decides to redeem the USD345 million perpetual bonds, this would likely benefit its share price as it would signal that the group has idle cash on hand. However, NEW WORLD DEV still has HKD1.3 billion in fixed-rate bonds maturing in March next year, and HKD7.7 billion in redeemable perpetual bonds due on the redemption date in June next year. UBS gave NEW WORLD DEV a Sell rating, with a target price of HKD4. AAStocks Financial News |
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