Visayas and Mindanao (VisMin) property developer Cebu Landmasters Inc. (CLI) is planning to raise up to ₱5 billion from the issuance of sustainability-linked bonds as the third and final tranche of its three-year shelf registration program of up to ₱15 billion.

Philippine Ratings Services Corp. (PhilRatings) said it has assigned an issue credit rating of PRS Aa plus, with a stable outlook, to CLI’s proposed sustainability-linked bonds amounting to ₱3 billion, with an oversubscription option up to ₱2 billion.

The ratings agency has also maintained its issue credit rating of PRS Aa plus, with a stable outlook, to CLI’s prior outstanding bond issuances of ₱10 billion.

Obligations rated PRS Aa are of high quality and are subject to very low credit risk, as the obligor’s capacity to meet its financial commitment on the obligation is very strong.

A stable outlook indicates that the rating is likely to be maintained or to remain unchanged in the next 12 months.

PhilRatings said it identified key considerations in assigning the ratings and the corresponding outlook, including CLI’s sound management and strategy, with a sustained competitive advantage in the VisMin markets, as evidenced by its growth over the last few years.

Other factors considered include its steady earnings growth on account of the company’s real estate sales, its adequate liquidity and acceptable leverage level, and the threats from its highly competitive market, with peers having access to significant capital and a substantial land bank.

“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,” noted PhilRatings.

CLI continues to pursue its plans to establish and deliver quality developments across the VisMin region and enter Luzon. It remains proactive in land bank acquisition to sustain its pipeline of developments and drive revenue growth moving forward.

The firm has a total land bank of 187.5 hectares (ha), including the recent acquisition in Liloan, Cebu. CLI is also actively negotiating with landowners in Cebu, Iloilo, Bacolod, and Luzon to strengthen its presence in estate developments.

PhilRatings noted that 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.

“These players may possess substantial capital and extensive landholdings in the area. Nevertheless, CLI’s expertise and familiarity in the VisMin markets attracts possible joint ventures (JVs) with landowners and offers for property acquisitions,” it added.

Looking ahead, CLI intends to bolster its expansion efforts by securing strategic locations and forging new local partnerships to penetrate emerging markets.