Vista Land, ALI Plan to Issue Housing Bonds

MANILA, Philippines – Two property developers are planning to issue this year another tranche of homestarter bonds, an innovative instrument that allows retail investors to build up funds for full or partial down payment they can use to acquire units in the future.

Vista Land & Lifescapes Inc. and Ayala Land Inc. (ALI), both listed on the Philippine Stock Exchange (PSE), are eyeing to issue the bonds in the second half, officials said in separate interviews.

“We intend to do another tranche of (the) Homebuilder bonds,” said Manuel Paolo Villar, Vista Land president and chief executive officer.

Villar said the bonds may have a tenor of five years and may be a combination of one time payment and the usual monthly incremental payments.

“We’re seeing if we want to restructure that,” he said, adding that many investors prefer the one time payment of lump sum.

VLL has an approval from the Securities and Exchange Commission for P2.5 billion of Homebuilder Bonds, of which P500 million was already sold in 2012.

Similarly, ALI, the listed property and mall developer of the Ayala Group, is looking to issue another round of its pioneering homestarter bonds worth P2 to P3 billion.

In an interview, ALI chief financial officer Jaime Ysmael said the the company is planning to do that this year.

The instrument enables bondholders to build up full or partial downpayment to buy a residential unit in the future.

“We’re looking at (another round) possibly this year,” he said.

With a total amount of P2 to P3 billion, ALI is looking at issuing a three-year offer.

“It’s not a fund raising activity,” Ysmael said, adding that it is more to help prospective home buyers raise funds for a seed money that would help them acquire a residential unit in the future.

The coupon rate may be 3.5 percent to four percent, same as in previous rounds of homestarter bonds.

“The rate and terms will be almost the same,” he said.

For a three-year instrument, Ysmael said a 3.5 to four percent rate is attractive enough.

ALI first launched the innovative instrument in 2006, making it the first property company to issue such types of bonds.

It has been issuing the bonds regularly, saying that it has been an effective savings instrument for many bondholders.

In the past, eligible investors including the targeted retail investors, can buy a minimum of P50,000 worth of the bonds and in multiples of P5,000 or P10,000 thereafter