8990 Holdings eyes P9B from notes issue

MANILA, Philippines - Mass housing builder 8990 Holdings Inc. is raising up to P9 billion from the offering of debt papers to selected institutional investors.

The company obtained the approval of its board for the issuance of as much as P5-billion corporate notes with an oversubscription option of up to P4 billion.

The listed low-cost housing developer has mandated  BDO Capital and Investment Corp. and First Metro Investment Corp. as joint issue managers and lead underwriters.

The terms and conditions of the sale are subject to the approval of the Securities and Exchange Commission,” 8990 Holdings said in a disclosure to the Philippine Stock Exchange.

The bond market offers a very efficient way to borrow capital. While companies can borrow from banks, issuing bonds has become a more attractive proposition as the interest rate they pay bond investors is often less than the rate available in banks.

By issuing bonds directly to the investors, corporations can eliminate the banks as “middlemen” in the transaction, making the borrowing process more efficient and less expensive.

8990 Holdings president and CEO Januario Jesus Atencio said the bond offering will allow the company to convert its short-term debts into long-term debts with the end view of more easily meeting other expense obligations and strengthening the balance sheet.

The company has been on an aggressive expansion binge in a bid to maintain an annual growth of at least 20 percent.  Last year, its net earnings surged 52 percent to P3.3 billion, exceeding its goal amid a growing local economy and a strong demand given the huge backlog in the market.

For this year, 8990 Holdings is eyeing a net income of between P3.8 billion to P4 billion or an increase of 15 to 21 percent from the previous year’s level.

For this year, it will launch eight new projects covering nearly 80 hectares of land totaling 14,010 units or 20 percent more than the 11,574 units rolled out in 2014.  These include horizontal projects in Cebu, Davao, Cavite, Rizal, medium-rise buildings in Davao and the National Capital region, and a high-rise project in Makati.

8990 Holdings has completed 11 projects, translating to about  22,000 housing units across the country.

The company  intends to widen its geographical reach, which currently comprises seven of the the country’s 14 regional growth centers.