VisMin developer Cebu Landmasters Inc. is planning to raise up to P5 billion from the planned issuance of Sustainability-Linked Bonds which will be the second tranche of its three-year Shelf Registration program amounting to P15 billion.
Philippine Rating Services Corporation (PhilRatings) said it has assigned an Issue Credit Rating of PRS Aa plus, with a Stable Outlook, to CLI’s proposed Sustainability-Linked Bonds of P3.0 billion, with an Oversubscription Option of up to P2.0 billion.
In relation to the proposed bonds, CLI’s Sustainability Performance Targets are to build 8,500 cumulative affordable homes by the first quarter of 2027 and 16,000 cumulative affordable homes by the first quarter of 2029.
The proceeds of the proposed bond issuance will be used to refinance CLI’s maturing obligations in 2025 and other general corporate purposes.
In addition, PhilRatings has also maintained its Issue Credit Rating of PRS Aa plus, with a Stable Outlook, for both CLI’s outstanding bond issuances of P5.0 billion and outstanding Series A to C Corporate Notes of P5.0 billion.
Obligations rated “PRS Aa” are of high quality and are subject to very low credit risk. The obligor’s capacity to meet its financial commitment on the obligation is very strong. The “plus” further qualifies the assigned ratings.
A Stable Outlook, on the other hand, indicates that the rating is likely to be maintained or to remain unchanged in the next 12 months.
PhilRatings said “The rating assigned to the proposed Sustainability-linked Bonds is mainly in relation to the Company’s capacity to pay the rated bonds and is not an opinion on the attainability or capability to achieve the sustainability targets linked with the bonds.”
It added that, key considerations in the assignment of the ratings and outlook includes CLI’s sound management and strategy, with a sustained competitive advantage in the Visayas and Mindanao (VisMin) markets as evidenced by its growth over the last few years.
Also factored-in is CLI’s sustained earnings growth on account of its real estate sales, its adequate interest coverage ratios despite a more leveraged capital position, and threats from a highly competitive market, with peers having access to significant capital and a substantial landbank.
PhilRatings said CLI operates in a highly competitive market, facing strong competition from local and national players that are also expanding in the VisMin regions, particularly Cebu.
It added that, “These players may possess substantial capital and extensive landholdings in the area.”
However, PhilRatings noted that C”LI’s extensive familiarity in the VisMin markets attracts possible joint ventures (JVs) with landowners and offers for property acquisitions. CLI’s track record of successful JVs underscores its ability to work effectively with its JV partners.”
Looking ahead, CLI intends to bolster its expansion efforts by securing strategic locations and forging new local partnerships to penetrate emerging markets.