Mass housing developer 8990 Holdings plans to return to the capital market in the third quarter, aiming to raise P8 billion by selling a mix of preferred shares and pioneering bonds backed by housing receivables.
8990 Holdings intends to raise P5 billion from an issuance of preferred shares and another P3 billion from what is envisioned to be the first private sector-led issuance of asset-backed securities (ABS) in the Philippines, company president and chief executive officer Januario Jesus Atencio said in a briefing.
Atencio said the company had mandated China Bank Capital to underwrite both offering of preferred shares and ABS.
8990 Holdings is seeking to amend its charter to allow the reclassification of 100 million unissued common shares to preferred shares, paving the way for the offering of such preferred shares. This is the first tranche of a P10-billion shelf registration program.
The fundraising plans are in line with the firm’s bid to boost cash flow to fund expansion.
Asked why 8990 Holdings chose to offer preferred shares than common shares, company chief finance officer Roan Buenaventura-Torregoza said: “There’s discussion on the board on whether we want to do that because of dilution issue. They are not ready to be diluted.”
Atencio said the offering of preferred shares might happen around the same time that 8990 Holdings’ long-planned securitization deal would be executed.
“It’s the first major private sector-led securitization effort ever in the history of Philippine housing finance. That’s why I’m personally excited about this,” Atencio said.
This will open up a new avenue in housing finance as the originator becomes the developer itself.
Securitization is a way of pooling assets and turning them into security. In the case of 8990 Holdings, it plans to issue bonds backed by cash flow coming from its contract-to-sell portfolio.
“It’s plain vanilla type—the basic type of securitization,” Atencio said. “You have cash flow and you want to liquefy cash flow today and therefore, you pay the bond coming out of that cash flow. Then, there are enhancements that you put in as credit risk minimization mechanism.”
8990 Holdings has been planning this securitization deal for years. Asked why he was confident this could finally take off, Atencio said Romeo Uyan Jr.—the president of underwriter China Bank Capital—was a securitization expert during a previous overseas job. —DORIS DUMLAO-ABADILLA