Private credit firms have been actively circling the distressed assets of Hong Kong property developers as banks grow weary of extending credit to the troubled sector.

Ares Management approached at least two banks in recent weeks to purchase their holdings of debt issued by Hong Kong developer New World Development Co., according to people familiar with the matter. 

The US-based alternative investment manager was seeking to acquire a share of New World’s debt at a discount in hopes of partaking in the company’s ongoing refinancing exercise, said the people, who asked not to be identified discussing private matters. 

Ares didn’t specify the discount or amounts to the two banks, which showed little interest to engage, said the people, adding that the current status of Ares’ requests remains unclear.

An Ares spokesperson declined to comment. 

Private credit firms have been actively circling the distressed assets of Hong Kong property developers as banks grow weary of extending credit to the troubled sector.

Last year, Ares had sought to buy a stake in a HK$10.2 billion ($1.75 billion) project loan backing the luxury-property development The Corniche, but was unsuccessful in its bidding process.

New World is under mounting stress to cope with one of the highest debt burdens among the city’s developers amid a property slump. The firm has HK$58.1 billion of unsecured loans maturing in 2025 and 2026. It is also proposing to use US$3.8 billion of additional properties as collateral to refinance facilities maturing in 2027 and beyond.