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FLI bond issue given top rating

Posted on September 15, 2014 09:51:00 PM [ BusinessWorld Online ]

FILINVEST Land, Inc.’s (FLI) proposed bond issue of up to P7 billion was assigned a PRS Aaa rating, the highest level of creditworthiness recognized by Philippine Rating Services Corp. (PhilRatings).

“Obligations rated PRS Aaa are of the highest quality with minimal credit risk. The obligor’s capacity to meet its financial commitment on the obligation is extremely strong,” PhilRatings said in a statement on Monday.

The bond offer’s principal amount is P5 billion, with an oversubscription option of up to P2 billion, and tenors of seven and 10 years.

PhilRatings also maintained the PRS Aaa rating of FLI’s outstanding bonds: P4.5 billion due in November; P3 billion due 2016; P7 billion due 2019; P4.3 billion due 2020; and P2.7 billion due 2023.

PhilRatings said the rating reflects “sustained growth of FLI’s real estate and leasing operations, resulting in strong income generation and improved cash flows; its conservative debt position and high financial flexibility; its 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 which are seen to remain favorable in the medium term.”

Around P4.95 billion of the net proceeds will be used to refinance the company’s bonds and debts expiring or with maturities from the fourth quarter of 2014 up to the second quarter of 2015.

The remainder will be used to partly finance its capital expenditure (capex) requirements up to the second quarter of 2015, the company said in its preliminary prospectus filed with the Securities and Exchange Commission on Sept. 4.

This year, FLI allotted P20 billion worth of capex for project development and “selective land acquisition.” Almost half of this will go to the development of FLI’s recurring business, particularly office and retail projects.

“The prospects for the real estate industry remain strong, with demand remaining highly supportive given the existence of a substantial housing backlog, as well as the relatively low prevailing interest rate on home financing,” PhilRatings said.

FLI, a unit of Filinvest Development Corp., has over 129 projects in 43 cities, with a land bank of 2,347 hectares as of the first half.

The company’s first-half net profit grew 15% year on year to P2 billion, while revenue rose 24% to P7.8 billion.

The real estate segment continued to be the major growth driver, accounting for 79% of sales.

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