New World’s Bond Coupon Delay Raises Three Questions

In the bond world, not calling a perpetual is bad. But not repaying coupon? That’s way worse.

Hong Kong-based New World Development Co.’s decision to defer interest payments on four perpetual notes took investors by surprise. While this is by no means an action of default — a perpetual resembles an equity when business conditions get tough — it’s nonetheless a highly unconventional move.