8990 Holdings sells housing loans to BDO Unibank

Top mass housing developer 8990 Holdings, Inc. has signed a Memorandum of Agreement with BDO Unibank for the purchase of Contractto-Sell (CTS) receivables worth R3 billion.

In a disclosure to the Philippine Stock Exchange, 8990 said terms of the agreement are: 1) without recourse; 2) based on outstanding principal balance; 3) one year seasoning; 4) collection fee of 3.5 percent and 4) Optional Marketing Agency Agreement for cancelled accounts.

“This latest purchase of R3.0 billion by BDO increases our CTS Purchase arrangements to R11.0 billion, first with BPI Family for R1.0 billion, Security Bank for R2.0 billion, and R5 billion for Securitization by Chinabank,” said 8990.

In noted that, “our target for 2016 to secure the CTS Purchase worth R11.0 billion has been secured.”

The firm earlier tapped China Bank Capital Corporation to arrange and underwrite the securitization of up to R5.0 billion of contract to sell receivables of the firm’s property development subsidiaries.

It said this is the first purely private sector and largest housing securitization deal in the country.

“This is a trailblazing moment for 8990 as well as the mass housing sector. The R5 billion securitization mandate given to China Bank is the largest securitization deal ever to be assembled in the Philippines and it opens up a whole new horizon for housing finance in the country,” said 8990 president Januario Jesus Atencio.

Under the proposed securitization, 8990’s subsidiaries will sell up to R5.0 billion worth of contract to sell receivables to a special purpose company (SPC) of China Bank Capital, which will then issue three tranches of asset-backed securities (ABS) to investors.

The SPC shall use the cash flows from the receivables to make principal and interest payments to the ABS investors until each tranche is completely paid in order of seniority.