Developers are cautious about borrowing loans from Hong Kong banks and find it difficult to refinance due to high debts

The U.S.'s aggressive interest rate hikes have caused financing costs to rise sharply, and both supply and demand for funds have been hit hard. LSEG (London Stock Exchange Group) data shows that Hong Kong’s total syndicated loans in 2023 fell by 20% year-on-year. Comprehensive news said that...

Developers' interest rates on syndicated loans from Hong Kong fell by 20%

Recently, developers have faced pressure from sharply rising financing costs, leading them to be more cautious in borrowing. According to LSEG data, total syndicated loans in Hong Kong fell by 20% year-on-year in 2023. This means developers need to face higher loan interest rates and stricter approval standards.

Strict approval process for collateral devaluation

As financing costs rise, the value of collateral declines, making the approval process more stringent. Developers must prove that the value of their collateral is sufficient to support the repayments of the loans they borrow. This presents an additional challenge for developers whose collateral values have declined.

High debt makes it difficult to refinance

Another problem is that as the cost of financing rises, it is difficult for developers who are already heavily indebted to obtain financing again. Banks and financial institutions are scrutinizing the financial status of these developers more carefully and may reject their refinancing applications.

Conclusion

Overall, developers in Hong Kong are facing dual pressures from rising financing costs and tighter approval conditions. They need to manage their finances more carefully to cope with this challenge. At the same time, governments and financial regulators also need to take measures to support these developers and promote the stable development of the real estate market.