8990 to issue P5B worth of bonds in May
MANILA, Philippines–Mass housing developer 8990 Holdings plans to pursue its P5-billion local bond debut by May this year.
In a statement issued Tuesday, SB Capital president Ricky Galang said 8990 Holdings’ bond offering was “on track for a May issue date,” refuting rumors that the exercise would be postponed.
SB Capital and BDO Capital & Investment Corp. are the joint issue managers for this exercise.
Galang added: “…we see no reason for any changes in the status or timing of the bond offering.”
The offering primarily targets institutional investors such as banks, retirement and pension funds, insurance companies, common trust funds and fixed income funds, as well as retail and high-net worth accounts.
8990 Holdings president Januario Jesus Gregorio Atencio earlier said that the principal purpose of the bond float was not necessarily to raise fresh capital, but to convert short-term debt into long-term liabilities.
“In the process, we will be able to match our long-term CTS (contract to sell) receivables with long-term debt. We note that raising an optimal amount of debt at low interest rates will benefit 8990’s shareholders as well, as it increases returns on equity and it makes our balance sheet more efficient,” Atencio said in an earlier statement.
“The timing of this bond issuance takes advantage of a low interest rate environment as well as excess liquidity in the market,” he added.
Given the banking sector’s real estate lending limits, a bond issuance is seen providing alternative sources of debt financing for corporate borrowers.
A corporate bond float diversifies 8990’s creditor base to include other financial institutions like trust, retirement and pension funds, insurance companies while likewise bringing in more individual retail investors. A fixed-rate borrowing over a long tenor is also seen eliminating the risk of interest rate fluctuations.
8990 Holdings reserves the option to upsize the offering by P4 billion depending on market demand the bonds and on whether the company feels that the final rate on the bonds is attractive enough.
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