As the recent rate cuts begin to reflect on the spending pattern of investors, developer DoubleDragon Corp. is returning to the bond market with a P10-billion offer and a promise of a higher yield.
In a stock exchange filing on Thursday, the property venture of tycoons Edgar Sia II and Tony Tan Caktiong said the bonds would carry an interest rate of 8 percent per annum.
The bonds, which will mature in five and a half years, would have a base offer of P5 billion but DoubleDragon has the option to issue an additional P5 billion in case of high demand.
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The offering is part of the company’s P30-billion bond program scheduled up to 2026 to support its expansion plans.
“Since the cycle of low interest rates has begun, this DD Otso Buenas retail bonds offering could be the very last time in many years [that it will be] at the 8-percent-per-annum area,” said Sia, chair of DoubleDragon.
This comes after the Bangko Sentral ng Pilipinas again slashed the benchmark interest rate of big banks by 25 basis points (bps). It has so far eased its monetary policy twice this year for a total of 50 bps to 6 percent.
“This offering also paves the way to accommodate the overflow of retail investors who were not able to participate in the recent DD Otso-Otso retail bonds,” Sia added, referring to DoubleDragon’s P10-billion bond offer in July that carried an 8.008-percent interest rate. The offering was cut short due to high demand from investors.
DoubleDragon sees its bond offers as a way to strengthen its balance sheet as it aims to breach the P100-billion equity mark this year. As of end-June, the real estate firm’s total equity has reached P95.16 billion.
Earlier, DoubleDragon said the overseas projects of its homegrown condotel chain Hotel101 were expected to generate $471 million in revenues.
These projects are Hotel101 Madrid in Spain and Hotel101 Niseko in Japan. Both are currently under construction.
Hotel101 Global Pte. Ltd., the Singapore-based unit of DoubleDragon, is expected to list on the tech-heavy Nasdaq Stock Exchange within the year.