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Filinvest Land bonds get top debt grade

Posted on October 02, 2013 10:32:27 PM [ BusinessWorld Online ]

PHILIPPINE RATING Services, Inc. (PhilRatings) has assigned the highest grade for Filinvest Land, Inc.’s planned P7-billion bond issuance, the local debt watcher said in a statement yesterday.

“Filinvest Land’s proposed bond issuance of P5 billion, with a P2 billion oversubscription option and a tenor of seven up to 10 years was assigned a PRS Aaa issue credit rating…” PhilRatings said.

Obligations rated PRS Aaa are of the highest quality with minimal credit risk due to the debtor’s capacity “to meet its financial commitment on the obligation is extremely strong.”

Filinvest Land, in a separate statement attached to a disclosure yesterday, said proceeds will be used to partially finance “projects that are targeted to be undertaken by the company in the fourth quarter” and its P27.3-billion capital expenditure (capex) for next year.

“The capex includes P9.9 billion for mid-rise and high-rise projects, P2.3 billion for horizontal or subdivision projects, P5.5 billion for office buildings, P7.7 billion for commercial/retail projects, and P1.9 billion for raw land acquisition,” the company said.

Ratings for Filinvest Land’s outstanding P4.5-billion bonds due in 2014, P3-billion bonds due in 2016, and P7-billion bonds due in 2019 were also maintained at PRS Aaa.

According to PhilRatings, the grade reflects the several factors: the firm’s sustained growth of real estate and leasing operations resulting in strong income generation; conservative debt position and high financial flexibility; established brand name and track record; its focused strategy with a geographically diverse portfolio and substantial land bank for future growth; and economic and industry conditions are seen to remain favorable in the medium-term.

Filinvest Land specializes in the socialized, affordable and middle-income housing segments.

The property developer also has leasing operations from its portfolio of office buildings and a retail mall.

The company had over 100 projects in 39 cities across the country, with a land bank of 2,251 hectares as of end-2012, according to PhilRatings.

“Despite the aggressive expansion of the company, its debt-to-equity ratio and debt-to-capitalization ratio remained relatively conservative at 0.57x and 36.2%, respectively, as of the end of the first half of 2013,” PhilRatings said.

At the same time, the debt watcher said the “prospects for the real estate industry continue to remain strong, with demand remaining highly supportive given the existence of a substantial housing backlog, a growing business process outsourcing industry and rising disposable incomes.”

“Such factors bode well for the continued expansion plans of the company,” PhilRatings said.

Filinvest Land recorded P1.72-billion profit for the first half, up by 12.42% from P1.53 billion a year ago.

This as revenues increased by 18.48% to P6.22 billion from P5.25 billion, while cost and expenses rose by 23.74% to P4.17 billion from P3.37 billion.

Shares of Filinvest Land gained two centavos or 1.24% to close P1.63 apiece yesterday from P1.61 each on Tuesday. -- Cliff Harvey C. Venzon   

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