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The Star
11-07-2025
- Business
- The Star
Tycoons damaging Hong Kong's credit culture
The city's old money are dishing out one nasty surprise after another. — Bloomberg HOW creditworthy are Hong Kong's billionaire-tycoons? Despite the glamour and prestige they project, the city's old money are dishing out one nasty surprise after another. As bankers and investors wake up to the reality that they might never be made whole, the easy credit culture long afforded to the elite will inevitably come to an end. New World Development Co's decision not to repay coupons on its perpetual notes was a rude awakening but it was by no means an outlier. Emperor International Holdings Ltd, a fellow developer that sells luxury apartments, said it had HK$16.6bil (US$2.1bil) in bank borrowings that are either overdue or have breached loan covenants, which may result in immediate repayment requests. Emperor is a household brand in Hong Kong. The 82-year-old patriarch Albert Yeung started with a jewellery store in the late 1960s, selling Rolex and Omega watches. But over the years, the 'king of clocks and watches' expanded into media and real estate. Emperor Entertainment, in particular, is closely associated with local culture. It manages a roster of canto-pop singers and actors such as Nicholas Tse. Or consider Far East Consortium International Ltd, which went public more than half a century ago. The builder, known for projects at the city's iconic old Kai Tak airport, has pan-Asia ambition. It has joined forces with Chow Tai Fook – New World's parent – to develop a casino complex in Brisbane ahead of the 2032 Summer Olympics. Just like New World, Far East is sowing confusion among its US$360mil perpetual note holders. In its latest annual report released in late June, the company said it would no longer pay dividends. Investors are now worried that it would follow its business partner's footsteps by not repaying coupons. The builder's open market operations are equally alarming. In the fiscal year ending March, it bought US$4mil principal amount of perpetuals but resold at a loss. This is a sharp turn of events. Last September, Far East won a concession from its investors, buying time to redeem debt. The builder promised then that it would 'aim to initiate partial call' in the first quarter of 2025. Its own trading activities suggest it has not done so. Until recently, the city's old money had it easy. The name brand itself spelled investment grade. As of last June, nearly 70% of New World's bank loans were unsecured. In addition, local borrowers could issue bonds governed by English law. By comparison, dollar notes from mainland developers, such as China Evergrande Group, had to follow New York law. For issuers, this law might be more stringent in the event of consent solicitation, where a company asks to change the terms of its securities. But that leniency is running thin. Granted, New World managed to eke out an US$11.2bil loan refinancing deal – perhaps because when it owes banks so much money, it owns them. Others may not be so lucky. — Bloomberg Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. The views expressed here are the writer's own.
CNA
10-07-2025
- Business
- CNA
Commentary: Hong Kong's tycoons are damaging the city's credit culture
HONG KONG: How creditworthy are Hong Kong's billionaire tycoons? Despite the glamour and prestige they project, the city's old money are dishing out one nasty surprise after another. As bankers and investors wake up to the reality that they might never be made whole, the easy credit culture long afforded to the elite will inevitably come to an end. New World Development 's decision not to repay coupons on its perpetual notes was a rude awakening, but it was by no means an outlier. Emperor International Holdings, a fellow developer that sells luxury apartments, said it had HK$16.6 billion (US$2.1 billion) in bank borrowings that are either overdue or have breached loan covenants, which may result in immediate repayment requests. Emperor is a household brand in Hong Kong. The 82-year-old patriarch Albert Yeung started with a jewellery store in the late 1960s, selling Rolex and Omega watches. But over the years, the 'king of clocks and watches' expanded into media and real estate. Emperor Entertainment, in particular, is closely associated with local culture. It manages a roster of canto-pop singers and actors, such as Nicholas Tse. LOSING FAITH Or consider Far East Consortium International, which went public more than half a century ago. The builder, known for projects at the city's iconic old Kai Tak airport, has pan-Asia ambition. It has joined forces with Chow Tai Fook – New World's parent – to develop a casino complex in Brisbane ahead of the 2032 Summer Olympics. Just like New World, Far East is sowing confusion among its US$360 million perpetual note holders. In its latest annual report released in late June, the company said it would no longer pay dividends. Investors are now worried that it would follow its business partner's footsteps by not repaying coupons. The builder's open market operations are equally alarming. In the fiscal year ending March, it bought US$4 million principal amount of perpetuals but resold at a loss. This is a sharp turn of events. Last September, Far East won a concession from its investors, buying time to redeem debt. The builder promised then that it would 'aim to initiate partial call' in the first quarter of 2025. Its own trading activities suggest it has not done so. TOO BIG TO FAIL? Until recently, the city's old money had it easy. The name brand itself spelled investment grade. As of last June, nearly 70 per cent of New World's bank loans were unsecured. In addition, local borrowers could issue bonds governed by English law. By comparison, dollar notes from mainland developers, such as China Evergrande Group, had to follow New York law. For issuers, this law might be more stringent in the event of consent solicitation, where a company asks to change the terms of its securities. But that leniency is running thin. Granted, New World managed to eke out an US$11.2 billion loan refinancing deal – perhaps because when it owes banks so much money, it owns them. Others may not be so lucky. Already, lenders are tightening the screws on smaller developers, asking for more collateral and halting new loans altogether. As for bond investors, they no longer assume Hong Kong businessmen would act any differently from those in the mainland. They are not.
Business Times
09-07-2025
- Business
- Business Times
Hong Kong's tycoons are damaging the city's credit culture
How creditworthy are Hong Kong's billionaire tycoons? Despite the glamour and prestige they project, the city's old money are dishing out one nasty surprise after another. As bankers and investors wake up to the reality that they might never be made whole, the easy credit culture long afforded to the elite will inevitably come to an end. New World Development's decision not to repay coupons on its perpetual notes was a rude awakening, but it was by no means an outlier. Emperor International, a fellow developer that sells luxury apartments, said it had HK$16.6 billion (S$2.7 billion) in bank borrowings that are either overdue or have breached loan covenants, which may result in immediate repayment requests. Emperor is a household brand in Hong Kong. The 82-year-old patriarch Albert Yeung started with a jewellery store in the late 1960s, selling Rolex and Omega watches. But over the years, the 'king of clocks and watches' expanded into media and real estate. Emperor Entertainment, in particular, is closely associated with local culture. It manages a roster of canto-pop singers and actors, such as Nicholas Tse. Or consider Far East Consortium International, which went public more than half a century ago. The builder, known for projects at the city's iconic old Kai Tak airport, has pan-Asia ambition. It has joined forces with Chow Tai Fook – New World's parent – to develop a casino complex in Brisbane ahead of the 2032 Summer Olympics. Just like New World, Far East is sowing confusion among its US$360 million perpetual note holders. In its latest annual report released in late June, the company said it would no longer pay dividends. Investors are now worried that it would follow its business partner's footsteps by not repaying coupons. The builder's open market operations are equally alarming. In the fiscal year ending March, it bought US$4 million principal amount of perpetuals but resold at a loss. This is a sharp turn of events. Last September, Far East won a concession from its investors, buying time to redeem debt. The builder promised then that it would 'aim to initiate partial call' in the first quarter of 2025. Its own trading activities suggest it has not done so. Until recently, the city's old money had it easy. The name brand itself spelled investment grade. As at last June, nearly 70 per cent of New World's bank loans were unsecured. In addition, local borrowers could issue bonds governed by English law. By comparison, dollar notes from mainland developers, such as China Evergrande Group, had to follow New York law. For issuers, this law might be more stringent in the event of consent solicitation, where a company asks to change the terms of its securities. But that leniency is running thin. Granted, New World managed to eke out an US$11.2 billion loan refinancing deal – perhaps because when it owes banks so much money, it owns them. Others may not be so lucky. Already, lenders are tightening the screws on smaller developers, asking for more collateral and halting new loans altogether. As for bond investors, they no longer assume Hong Kong businessmen would act any differently from those in the mainland. They are not. BLOOMBERG
South China Morning Post
02-07-2025
- Business
- South China Morning Post
Emperor's financial struggle mirrors the current state of Hong Kong's property sector
Hong Kong developer Emperor International Holdings' struggles reflect the highs and lows the city's property sector has endured over the past few years. Advertisement Just over five years ago, residential and commercial real estate prices and rents were hitting record highs. Developers reported robust earnings and had access to cheap financing, boosting their confidence – and that of investors – to spend more on new projects or acquire existing income-generating properties. But this golden era ended abruptly. Social unrest in 2019 and the Covid-19 pandemic that followed triggered an economic recession, reducing demand for commercial property at a time when new projects were being launched. The downturn also coincided with a sharp rise in Hong Kong's interest rates, which were raised 11 times between March 2022 and July 2023 to over 5 per cent from 0.5 per cent, before falling slightly last year. Emperor's full-year loss of HK$4.74 billion (US$600 million) for the year ended March 2025, more than double the HK$2.04 billion a year earlier, reveals the severity of the crisis facing the sector. The group, controlled by 82-year-old tycoon Albert Yeung Sau-shing, disclosed that bank borrowings totalling HK$16.6 billion were overdue and some associated loan covenants had been breached. Albert Yeung, the founder and chairman of Emperor Group, pictured in December 2024. Photo: VCG/VCG via Getty Images 'The broad issues faced by Hong Kong developers in the current environment would be weak property valuation and soft earnings from poor sales,' said Xavier Lee, an equity analyst at Morningstar. Lee did not specifically comment on Emperor's predicament, but gave a general overview of the challenges developers face in the current environment.
