8990 Holdings Inc (8990) has mandated China Bank Capital to arrange and underwrite a PHP5 billion-worth ($107 million) securitisation of contracts to sell (CTS). 8990 subsidiaries will sell the CTS in 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 will 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.
“This is a trailblazing moment for 8990 as well as the mass housing sector. The five 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 Januario Jesus Atencio, 8990 president and chief executive officer.
The agreement was signed by 8990 chairman Mariano Martinez; Romy Uyan Jr, president of China Bank Capital Corp; and director Manolo San Diego.
8990’s proposed securitization is expected to be the largest securitization under the Securitization Act of 2004.
China Bank Capital is the investment banking subsidiary of China Banking Corporation, one of the largest domestic banks.
8990 inked a deal to sell PHP2 billion worth of in-house CTS receivables with Security Bank Corp in March. It also signed an agreement with BPI Family Savings Bank for the purchase of CTS receivables worth PHP1 billion in October last year.
8990 is a low-cost mass housing developer in the Philippines that has completed 16 mass housing projects comprising approximately 14,000 housing units under the DECA Homes and Urban DECA Homes brands.