Villar firm offers premium rate to raise $300M

The upcoming maturity of an existing debt has pushed a subsidiary of Vista Land and Lifescapes to pursue its overseas debt issuance at a high rate, raising $300 million.

In a stock exchange filing on Tuesday, Vista Land said the five-year notes issued by VLL International Inc., an entity created for the purpose of issuing debt paper, were priced at a high 9.375 percent a year.

This represents the interest rate that VLL International needs to pay bondholders.

READ: Villar’s Vista Land savors real estate turnaround

CreditSights, a company under international think tank Fitch Solutions, previously pointed out that VLL International had a $350-million debt due in November, forcing the Manny Villar-led company to proceed with the issuance despite high rates.

The bonds, which will be listed on the Singapore Exchange Securities Trading Ltd., were likewise unrated by credit rating companies, implying a high-risk issuance for investors.

Juan Paolo Colet, managing director at investment bank China Bank Capital Corp., said VLL International offered a “reasonable premium” to achieve its target issue size.

“The new bonds will probably increase VLL’s overall borrowing cost, but this also means the company is confident that it can deploy the funds efficiently and profitably,” Colet said in a Viber message.

Guarantees

According to Vista Land, the bonds were issued under VLL International’s $2-billion medium-term note program.

These are also guaranteed by Vista Land and its subsidiaries Brittany Corp., Camella Homes Inc., Communities Philippines Inc., Crown Asia Properties Inc., Vista Residences Inc., and Vistamalls Inc.

This means that should VLL International default on the bond obligation, repayment will be shouldered by the guarantors.

Union Bank of the Philippines was tapped as the domestic lead manager, while DBS Bank Ltd. and HSBC were the joint global coordinators, bookrunners and lead managers.

Vista Land has a P30-billion planned capital expenditure this year, 98 percent of which, or P29.4 billion, will be spent on building new residential units and land development.

The remaining 2 percent of the budget will be set aside for land acquisition and construction of investment properties, according to Vista Land president and CEO Manuel Paolo Villar.

The property giant, which currently has over 100 investment properties covering 1.6 million square meters, has so far spent P7 billion.

Despite slower consumer spending, Vista Land’s earnings in the first quarter expanded by 11 percent to P3 billion, driven by new projects.

Revenues likewise jumped by 11 percent to P10 billion, while reservation sales reached P20.8 billion, up by 12 percent. INQ