What you Need to Know About Vista Land’s P10-B Bond Sale Rollout

By: Brianna Yparraguirre
vista land

The pioneer of Philippine real estate, Vista Land & Lifescapes, Inc., has made news once more with the announcement of a P10-billion bond offering. This calculated action is a major turning point in the company’s history, demonstrating its capacity for sustained expansion, sound financial management, and creative problem-solving within the sector. With the recent announcement of a P10-billion bond sale, Vista Land & Lifescapes, Inc. and its subsidiary Crown Asia are at a critical juncture. Crown Asia, a division of Vista Land’s integrated property development business, will benefit greatly from this calculated financial move, opening the door to quicker expansion, more creative solutions, and long-term success in the real estate sector.

The P35 billion debt program of the real estate behemoth Vista Land & Lifescapes Inc., headed by tycoon Manuel Villar Jr., began with the opening of a P10 billion bond offering on Tuesday.

According to Vista Land, the net proceeds will be utilized for both general corporate operations and the refinancing of certain of the company’s maturing debt obligations.

At the end of September, Vista Land had P130.9 billion in equity and P337.8 billion in assets. P21.3 billion was allocated for capital expenditures, primarily for building and land development.

Vista Land sets 10- B Bond issuance interest rates

The Villar Group’s property development division, Vista Land & Lifescapes Inc., has determined the interest rate for its fixed-rate notes denominated in pesos.

Vista Land disclosed to the Philippine Stock Exchange (PSE) that the interest rate on its bonds due in December 2026 was fixed at 7.5426 percent per annum, while for its bonds due in December 2028, it was set at 7.6886 percent per annum.

Vista Land intends to issue P10 billion in bonds, with a P6 billion base offer and a P4 billion option for oversubscription.

This is the P35 billion fixed rate bond’s first tranche, which was previously registered under the Securities and Exchange Commission’s (SEC) shelf registration program.

Who are Vista Land’s joint issue managers?

According to Philstar, Union Bank of the Philippines, SB Capital Investment Corp., and China Bank Capital Corp. have been appointed by Vista Land as joint issue managers, joint lead underwriters, and joint book-runners.

Local debt watchdog Credit Rating and Investors Services Philippines Inc. (CRISP) has given the company a AAA rating; Philippine Rating Services Corp. (PhilRatings) has given the bonds a PRS Aaa rating, the highest rating given by both organizations.

In the first nine months of this year, Vista Land reported a net income of P8.2 billion, a 70% increase over the same period in 2022.

The corporation started 28 projects at the end of the third quarter, with an anticipated project value of around P40 billion.

What is the benefit of 10-billion bond issuance for Filipinos?

Manuel B. Villar Jr., the chairman of Vista Land, stated that the company is pleased with its performance and has high hopes for the industry going forward. He continued by saying that the group’s success was largely due to the robust 5.9 percent GDP growth, steady growth in OF remittances, and consumer retaliation spending.

This year has seen them introduce new projects, which has contributed to their reservation sales increasing by 10% to P53.1 billion during the same period.

As the holidays draw near, Vista Land is excited to welcome more patrons to its business centers and the return of Filipinos living abroad, both of which are positive signs for our residential sales.

As they move forward, Villar stated, their goal is to optimize Vista Land’s current resources, they stay dedicated to their mission of creating communities throughout the Philippines that endure over time.

The bond issue strengthens Vista Land’s standing as a trustworthy and powerful participant in the real estate market. It strengthens investor confidence in the company’s financial stability, which is attested to by its sound financial management, reliable track record of completing high-quality projects, and flexibility in response to changing market conditions.

In addition, the fact that Vista Land is selling its bonds at a time when the economy is expanding says a lot about its resilience and foresight.

Short-term to long-term property if the bond issuance

In addition to the short-term financial effects, Vista Land’s commitment to long-term value creation and sustainable growth is highlighted by this bond issue. The company’s business strategies reflect its emphasis on environmental sustainability, community development, and social responsibility. This aligns with global trends towards corporate practices that are ethical and responsible.

Moreover, to demonstrate its financial responsibility and instill confidence in the market, Vista Land’s P10 billion bond offering highlights its dedication to providing value to stakeholders, investors, and the communities it serves. This action represents tenacity, vision, and an ongoing commitment to quality as the organization innovates and reshapes the real estate market.

Long-Term Value Creation: Vista Land’s dedication to long-term value creation is highlighted by the bond offering, which goes beyond short-term financial rewards. The organization makes sure that its projects benefit society and generate long-term value for stakeholders by emphasizing sustainable practices, community development, and responsible business tactics.

The launch of Vista Land’s P10-billion bond offering is more than just a financial deal; it represents the company’s fortitude, vision, and dedication to bringing about constructive change in the real estate industry. The advantages of this calculated action go well beyond monetary rewards as it continues to innovate and lead the way, establishing a future where opportunity and sustainable growth meet to the mutual benefit of all.

Vista Land & Lifescapes, Inc. | Leading Integrated Property Developer | Home

Vista Land & Lifescapes, Inc. is a prominent player in the real estate industry, creating communities and transforming landscapes all over the Philippines.

Since its founding in 1977 by Chairman Manny Villar Jr., Vista Land has developed into one of the nation’s biggest homebuilders. Its forward-thinking methodology spans multiple real estate sectors, such as retail centers, master-planned communities, housing developments (horizontal and vertical), and recreational complexes.

Vista Land’s commitment to integrated property development is the key to its success. Building homes is only one aspect of this holistic approach; another is creating whole lifestyles.

The business proved to be resilient and adaptable even under trying circumstances, like the worldwide epidemic. Vista Land prioritized health and safety while maintaining uninterrupted client service by promptly adopting digital advances, virtual tours, and remote transactions.

With an eye on the future, Vista Land will keep breaking new ground and growing its presence in the Philippine real estate market. Its audacious goal transcends national boundaries, looking for ways to transfer its established track record in integrated property development to new markets throughout Southeast Asia.

Crown Asia’s houses and lots for sale benefit greatly from the bond issue, which gives the subsidiary an essential source of funding for aggressive expansion plans and taking advantage of real estate market expansion opportunities. With this infusion of capital, Crown Asia will have the financial flexibility to expand its market presence and footprint by acquiring prime real estate, creating new projects, and improving its current holdings.

What is the meaning of the pledged bonds?

Pledged bonds are any bonds that have been given to a security instrument issuer as collateral security for security instrument repayment obligations, or in which interest has otherwise been granted.

A sort of bond issuance known as “pledged bonds” is one in which the issuer pledges certain assets or property as security against bondholder default. Investors can be somewhat reassured by this security arrangement, which guarantees that the pledged assets will be recouped in the event that the issuer defaults on its obligations.

Expanding the knowledge about pledged bonds

Collateralized Security

By attaching the bond’s issue to real assets, pledged bonds give investors an extra degree of security. These assets might be any kind of valued asset with enough worth to pay the principal and interest on the bond, including real estate, machinery, supplies, and inventories.

Risk Mitigation

The risk of investing in bonds is reduced for investors when pledged assets are present. Bondholders have a claim on the pledged assets in the event of issuer default or bankruptcy. These assets may be sold to pay off the remaining debt, lowering the possible loss for investors.

Priority of Claim

Pledged bonds frequently have conditions pertaining to the order in which repayment is due in the event of failure. Pledged bondholders may be able to access the pledged assets before other creditors, increasing the chance that they will be able to recoup their investment.

Enhanced Credibility

Bonds backed by assets pledged by the issuer may have an increase in creditworthiness. Because collateral lowers the perceived risk for investors, it may lead to more favorable terms when issuing bonds, such as lower interest rates or higher credit ratings.

Assurance and Transparency

Pledged bonds offer assurance of the underlying assets that support the bonds. Investors can now see more clearly the collateral behind their investment, which gives them more comfort and faith in the issuer’s ability to meet its financial obligations.

The Bond Prices and Interest Rates in the Philippines 2023

In the Philippines, bonds and interest rates continue to be important topics that are impacted by a number of national and international economic variables as well as market movements. Understanding the relationship between bond prices and interest rates as we navigate the terrain of 2023 reveals a tapestry woven with economic indicators, changes in policy, and investor mood.

The Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, has significant influence over changes in interest rates. It sets the benchmark interest rate, or overnight reverse repurchase rate, or RRP, and its choices drive up borrowing costs and market rates as a whole.

The BSP’s monetary policy approach seeks to balance maintaining price stability with promoting economic growth in response to the current state of the economy. In order to decide on the best course of action for monetary policy during 2023, the central bank has taken a watchful stance, closely observing signs of the economy’s recovery, inflationary pressures, and external market dynamics.

Effect on Bond Values

Interest rates and bond prices are inversely correlated; as rates rise, bond prices typically decline and vice versa. When interest rates rise, freshly issued bonds have higher yields than old bonds, which makes the latter less appealing. Bond prices may drop as a result of this dynamic.

In contrast, bond prices typically rise in response to a drop in interest rates. In a lower-yield environment, existing bonds with higher coupon rates become more desirable, which could increase the price of those bonds in the secondary market.

Market Emotions and Investor Conduct

Bond prices and interest rate changes are heavily influenced by investor emotion and market expectations. Demand for bonds may be stimulated by optimism about steady inflation, fiscal reforms, and economic growth, which would result in lower yields and higher prices.

On the other hand, worries about inflation, geopolitical unrest, or uncertainty in the world economy might lead to a sell-off in bonds, which would drive down prices and raise yields as investors look for bigger rewards to offset perceived risks.

Corporate and Government Bonds

In the fixed-income market, Philippine government bonds, which are regarded as low-risk assets, are essential. These bonds’ rates are frequently used as standards for other fixed-income instruments. Investor interest in these bonds is influenced by the government’s credit ratings, debt management plans, and budgetary policies.

The risk profiles and yields of corporate bonds, which are issued by private companies, differ. The pricing and demand for these bonds are influenced by various factors, including the state of the issuing company’s finances, market conditions, and industry developments.

How do Bonds work in the real estate industry?

In the Philippines, bond sales are becoming a crucial component of real estate developers’ financing plans. Developers can access capital markets through these sales to get funds for large-scale projects, land acquisitions, infrastructure improvements, and expansion plans.

Bonds are debt securities that are issued by developers, real estate businesses, or property owners to raise money for their projects. In essence, investors lend money to the issuer through these bonds in return for regular interest payments and the assurance that the principal would be repaid when the bonds mature.

Types of Real Estate Bonds

1.) Corporate Bonds: To finance their operations, property acquisitions, development projects, or expansion activities, real estate corporations issue corporate bonds. The assets and income sources of the business serve as collateral for these bonds.

2.) Municipal bonds, often known as “munis,” are issued by local governments or municipalities to finance public infrastructure projects such as building new homes, schools, or roads. Through improving property prices and the local community, these bonds may have an indirect effect on the real estate market.

3.) Securitized Real Estate Debt: Securitized real estate debt is embodied in mortgage-backed securities (MBS) and collateralized mortgage obligations (CMOs). By combining mortgages or real estate loans, these products give bondholders access to investment options supported by the cash flows from the underlying real estate assets.

In the real estate sector, bonds are essential since they provide both towns and developers with a vital source of funding. Their issuance and trading affect market dynamics, investor portfolios, and the state of the real estate industry as a whole in addition to aiding in capital formation. Furthermore, bond sales have become a crucial financial tool in the Philippines, propelling the real estate industry’s expansion, creativity, and sustainability. These deals reflect a mutually beneficial partnership between capital-seeking developers and opportunity-seeking investors, changing the face of real estate development and investment while advancing the economy of the country. Bond sales are still a crucial part of the Philippine real estate industry’s transformation even as it continues to change.

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