Mass housing developer 8990 Holdings plans to roll out this third quarter a pioneering P3- billion retail bond offering backed by housing receivables.
Separately, 8990 Holding plans to unload via bilateral transactions some P10 billion in housing receivables under its contract to sell (CTS) portfolio this year, P2.5 billion of which had been done earlier in the year.
“We’d like to be less dependent on debt so this is the best way, even for our expansion,” Willibaldo Uy said in a briefing after 8990 Holdings’ stockholders’ meeting on Monday.
All of 8990 Holdings’ housing sales are immediately processed under its CTS portfolio, an internal financing arrangement at an average amortization rate of 9 percent. Then it’s up to the housing buyer to transfer the loan to the Home Development Mutual Fund (HDMF) or PagIBIG.
Uy said 8990 Holdings’ buyers still preferred the CTS mode even if they had other financing options.
Company chief financial officer Roan Buenaventura-Torregoza said the P3-billion securitization deal would likely be launched within the third quarter.
The CTS accounts backing the proposed securities are typically housing loans worth P950,000 on the average with a 25-year tenor but are in good standing or “seasoned” in the last five years, Torregoza said.
“We’ve finished the auditor’s report and we’re working on the legal report,” she added, noting that the mandated arranger China Bank Capital would afterwards work on it.
About P3 billion worth of securities with a tenor of at least five years will be issued against 8990 Holdings’ mature CTS receivables in a single tranche, Torregoza said.
Meanwhile, 8990 Holdings reported better-than-expected business in the first semester of the year, defying the usually sluggish second quarter, on the back of pent-up demand from end users.
Revenue in the first six months grew by 98 percent year-on-year to some P6 billion, beating the company’s P5.1-billion target for the period. Net profit margin amounted to 40 percent, better than 8990’s full-year goal of 37.5 percent.
These numbers suggested a net profit of P2.4 billion for the full year, doubling the P1.2-billion level last year, although 8990 Holdings has yet to release its six-month financial statement.
“I have to admit second quarter is normally a slow quarter for most developers but maybe there’s pent-up demand,” Uy said.
The second quarter is typically a weak season for mass housing developers as households delay major expenses due to school year opening. Historically, business would suffer as much as a 30-40 percent quarter-on-quarter during this period.
“We have seen that this is not the case for 8990 as we continue to bring in not only affordable but value for money products to market,” Uy said.
In the second quarter, 8990 Holdings’ revenue jumped by 142 percent year-on-year to P3.5 billion from the previous year. Housing deliveries doubled to 4,159 units from 2,216 units from last year.
Luzon accounted for 56 percent of total units sold in the first half, followed by Visayas with 30 percent. Meanwhile, Mindanao sold 14 percent of the total.