8990 Holdings sign securitization deal

8990 Holdings Inc., one of the country’s biggest mass housing developers, has mandated the investment banking arm of China Bank to underwrite the offering of up to P5 billion worth of securities backed by housing receivables.

“This is a trailblazing moment for 8990 as well as the mass housing sector. The P5-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,” 8990 president and chief executive officer Januario Jesus Atencio said in a disclosure to the Philippine Stock Exchange yesterday.

8990 Holdings chair Mariano Martinez yesterday signed the mandate with China Bank Capital Corp. president Romy Uyan Jr. and director Manolo San Diego, 8990 Holdings told the Philippine Stock Exchange.

Under the proposed securitization deal, 8990 Holdings’ subsidiaries will sell up to P5 billion worth of contracts to sell receivables to a special purpose company of China Bank Capital, which will then issue three tranches of asset- backed securities to investors. The special purpose vehicle will use the cash flow from the receivables to make principal and interest payments to the investors until each tranche is completely paid in order of seniority.

This means that 8990 Holdings will be able to unlock liquidity from its housing receivables as they will be bundled into securities to be offered to investors.

The contemplated transaction will be undertaken pursuant to a securitization plan to be submitted to the Securities and Exchange Commission (SEC) for approval.