New liquidity from deal with BDO

Mass housing developer 8990 Holdings Inc. has signed a deal to sell P3 billion worth of housing receivables to Sy family-led Banco de Oro Unibank, unlocking liquidity that can be reinvested to build and sell more houses.

This brings to P11 billion the total deals sealed by 8990 Holdings to pare down its in-house contract-to-sell (CTS) portfolio, meeting the target for 2016.

The deal with BDO still leaves around P9 billion worth of outstanding CTS in 8990 Holdings’ housing portfolio.

“We are targeting to send to Pag-IBIG another P4 billion this year. So the remaining is P5 billion,” 8990 Holdings president Januario Jesus Atencio III said.

The housing developer encourages buyers to eventually get long-term financing from Pag-IBIG, which offers a lower interest rate of 6.5 percent. Typically, buyers enter into CTS financing with 8990 Holdings while their Pag-IBIG takeout is being processed.

“But we are seeing new CTS for 2016 at P6 billion. So by the end of the year, we should have P10 to 11 billion, which we believe is a manageable CTS portfolio value moving forward,” Atencio said.

8990 Holdings earlier sold P1 billion worth of receivables to BPI Family Bank and P2 billion to Security Bank. The housing firm also earlier mandated the investment banking arm of China Bank to underwrite the offering of up to P5 billion worth of securities backed by housing receivables. Under the securitization deal, 8990 Holdings’ subsidiaries will sell up to P5 billion worth of CTS to a special purpose company of China Bank Capital, which will then issue three tranches of asset-backed securities to investors. The special purpose vehicle will, in turn, use the cash flow from the receivables to make principal and interest payments to the investors until each tranche is completely paid in order of seniority.

Under the agreements, the purchase value is based on outstanding principal balance. The receivables must be “seasoned”—or repayment track record—for at least 12 months and have had no past due experience in the past 12 months.