8990 to sell P2.4-B receivables

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By Denise A. Valdez

MASS housing developer 8990 Holdings, Inc. is looking to sell around P2.4-billion worth of contract-to-sell (CTS) receivables, a local debt watcher said.

In a statement over the weekend, Philippine Ratings Services Corp. (PhilRatings) said the listed firm is eyeing to securitize low-cost residential receivables, or convert its illiquid assets into a security through quantitative analysis.

The security will have a senior class and subordinated certificates, or Tranche A and Tranche B, respectively. The Tranche A certificates will amount to P1.8 billion and have a tenor of 10 years, while the Tranche B certificates will amount to P600 million and will be amortized after settling the Tranche A certificates.

PhilRatings disclosed 8990’s plans to announce that it has given the firm a conditional credit rating of “PRS Aa plus” for the Tranche A certificates and “PRS A” for the Tranche B certificates.

A PRS Aa rating means an offer is “of high quality and (is) subject to very low credit risk,” while a PRS A rating means the company making the offer has strong capacity to meet its financial commitments, although it is “susceptible to the adverse effects of changes in economic conditions.”

The ratings were also given a stable outlook, which means PhilRatings expects that the rating would not change in the next 12 months.

“The…ratings are considered conditional until the executed documentation for the transaction has been submitted to PhilRatings for review,” the debt watcher said.

“The conditional ratings were assigned based on draft transaction documents, and will be converted into final ratings once PhilRatings has determined that the representations as stated in the initial documents are also captured in the final signed documents,” it added.

8990 has been selling CTS receivables in recent years as a means to raise funds instead of incurring debt. It said last year its net debt-to-equity as of end-September stood at 0.94x, falling below its covenant ratio of 1.5x.

The company previously said it wants to double its 2019 capital expenditure of P4 billion this year to support its list projects, among which is its condominium building Urban Deca Homes Ortigas.

Earnings of the listed firm grew 23% to P4.21 billion in the first nine months of 2019 amid a 21% rise in revenues to P10.51 billion. Its shares at the stock exchange were flat on Friday’s trading at P14.72 each.