The Market Monitor Minding the Nation's Business
By Riza Lozada
Housing firm 8990 Holdings Inc. has signed a deal to sell P1 billion in receivables to the thrift-bank arm of the Ayala-led Bank of the Philippine Islands (BPI), in a move that would free up new capital for the mass-housing developer.
In a disclosure to the Philippine Stock Exchange, 8990 said it signed a memorandum of agreement (MOA) with BPI Family Savings Bank for the purchase of its in-house contract-to-sell (CTS) receivables.
The arrangement carries a limited recourse period of only two years. The actual date of purchase shall be on Friday.
“The agreement with BPI Family is a significant milestone for 8990, as it signals the growing acceptability of 8990 Holdings’ CTS receivables with the banking sector, paving the way for the creation of alternative housing finance in the private sector not only for 8990 but also for the entire mass housing sector,” said 8990 President and CEO Januario Jesus Atencio III.
Under the arrangement, BPI Family will immediately process the conversion of the CTS into a mortgage loan under its Kayang-kaya Pabahay Program.
The recourse ends once the CTS is converted into a mortgage loan, even before the two-year recourse period lapses.
Atencio said he expects to pursue similar arrangements with other banks and financial institutions in the near future.
The CTS receivables portfolio of 8990 jumped 44 percent to P14.1 billion in 2014, from P8.16 billion in 2013, boosting the interest income from CTS receivables by 69 percent to P901 million from P532 million.
In the first semester of 2015, CTS income hit P575 million. 8890 deems this CTS portfolio as a stable source of recurring income.
Despite the double-dig-it increase in the receivables portfolio, 8990 posted a collection efficiency of 93 per-cent last year.
In 2011, 8990 launched its CTS in-house facility called “CTS-Gold,” where qualified buyers can avail themselves of houses at a faster turnover by paying only a 2-percent down payment, 8.5-percent to 11.5-percent interest rate a year for a maximum of 25 years.