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FSMOne: NWD Latest Bond Exchange Offer w/ Large Principal Cut Offers Limited Appeal
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NEW WORLD DEV (00017.HK) announced yesterday (3rd) its bond exchange offer and formally invited bondholders to participate. This offer covers all of NWD's existing USD perpetual and fixed-term bonds (excluding HKD bonds), with plans to issue up to USD1.9 billion in new bonds, including a cap of USD1.6 billion for the new perpetual bonds. Jackson Chan, global bond senior manager at FSMOne, an online investment platform, commented that the exchange offer involves swapping existing perpetual bonds for new perpetual bonds, while forfeiting all accrued and unpaid interest. For fixed-term bonds, this arrangement effectively means an extension. Although the coupon rates on the two new bonds are not low, Chan noted that bondholders would have little incentive to accept the exchange offer given the substantial reduction in principal means bondholders have little incentive to accept the exchange offer. This exchange offer covers all USD perpetual bonds and fixed-term bonds, with early exchange offering higher compensation. Perpetual bondholders have to face nearly a 50% principal reduction, and all accrued interest and unpaid coupons will be canceled. Fixed-term bondholders also have to face varying degrees of principal reduction. AAStocks Financial News |
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