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8990 Holdings’ bond float

MARKET FILES-Lito GagniThe move of 8990 Holdings, now the No. 1 low-cost housing developer in the country, to issue bonds is something worth emulating for other listed shares, as it would result in increased business growth.

This bond issuance, for which it was given the green light by the Securities and Exchange Commission (SEC) for a minimum issue of P5 billion, comes right after the housing firm electrified the stock market with the entry of two big foreign equity funds, as long-term investor. These are the sovereign wealth fund of Malaysia, Khasana Nasional, and the TPG (Texas Pacific Group), one of the Big Five equity investors in the world. Both bought shares worth more than P2 billion each.

Bonds, which are debt instruments, would let 8990 Holdings to take advantage of its undisputed leadership in the low-cost housing segment, which has a backlog of 3 million units. That backlog, which grows by 6 percent a year, means that 8990 Holdings’ business is a sure ball.

The company has great potential and surely bondholders, who can get higher yields for their investments, compared to bank deposits, would welcome the bond float from the company. The bonds, we understand, are to be in scripless form in denominations of P50,000 each and in multiples of P10,000. That means it could be within the reach of OFW families and other savers.

The pronouncement of 8990 Holdings President Januario Jesus Atencio regarding the bond float, which has a maximum issue size of P9 billion, is a tell-tale sign that the company seeks to push the envelop further in its business model.

“We want to expand our engineering capacity. That’s one of the things we want to spend on. Right now, I’m good for 10,000 units a year,” he said.

There are great possibilities for the bond float as it would mean the company can further increase the construction of its housing units, which, as of last count, was now at 15,000 units per year. Considering the housing backlog alone of 6 million, that means the company could be in the market for at least 50 years. And that augurs well for its investors.

The company has been introducing great innovations in its business to a point that the two foreign investors who came in even cited the social dimensions of its housing business. One key point, for instance, is its minimum down payment of 2 percent, which makes the housing units affordable.

It is no wonder then that the company has been accelerating its housing business, with the construction of condominiums with its selling point anchored on the fact that the condo units serve as halfway houses for those employees who live out of the metropolis. Employees from Cavite, for instance, need not go home every day, as it would turn out that their expenses would be equal to their monthly amortizations for the 8990 condo units.

Indeed, if someone who works within Metro Manila can be assured of owning the condo unit he bought from 8990 Holdings, then he would gladly plunk his money toward purchasing the unit, as it would mean less hassles for him. This is the reason for the company’s choice of its locations: within a jeepney or bus ride for the employees.

This means great business possibilities for the company. Its upcoming Deca Homes along Edsa, just next to Shaw Blvd., for instance, has been enjoying tremendous take-up and why not, it just a walking distance away from the booming call center business in the Ortigas and Mandaluyong central business districts. The same is true for its other low-cost housing units in Gen. Trias, Cavite, and even in Cebu and Davao, where it is enjoying a tremendous following.

The fact that the Filipino psyche puts a premium on owning a house means that the business of housing remains big business. When an OFW returns, the first order of business for the family is that of having a house for having a house signifies reaching a new level of economic independence. This is where the business of 8990 Holdings holds much promise: it is well-positioned in housing the “houseless.”

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