Stressed Philippine builder Vista Land mulls how to pay bond

[MANILA] Philippine property developer Vista Land & Landscapes, owned by billionaire Manuel Villar, said that it’s looking at a slew of options to raise funds such as selling assets to meet debt obligations, including a US$420 million bond that’s due next July.

“The company continuously evaluates various funding and liquidity management alternatives,” Vista Land said in a statement to the Philippine Stock Exchange on Tuesday (Sep 8).

Apart from monetising assets, other options to raise funds include bank financing, operating cash flows and capital markets, it added.

Vista Land said that it’s also reviewing the sale of non-core assets including two malls which can raise up to 15 billion pesos (US$240 million) as part of its “broader capital and liquidity management initiatives”.

The financial stress confronting one of the major builders in the Philippines doesn’t appear to be indicative of a broader funding crisis among other developers in the country.

While the sector faces weaker residential demand and elevated borrowing costs, larger peers including Ayala Land and SM Prime Holdings have continued to access bank and bond financing.

Still, consumer spending and investment in the nation have been hit by the Iran war and a domestic corruption scandal, dragging economic growth to one of the slowest in the region and its inflation to one of the fastest. 

Vista Land is in a “precarious liquidity situation”, CreditSights said in a report. “The key risk is execution and timely fundraising ahead of debt maturities, compounded by weak financials and deep governance concerns.”

The company’s US dollar bonds have rebounded sharply from record lows reached earlier this year, as investors reassess its ability to raise funds to meet upcoming maturities.

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Its 7.25 per cent bonds due July 2027 climbed to about 80.3 cents on the dollar on Tuesday, from a record low of 47.5 cents on Jun 5, according to Bloomberg-compiled data. Its 9.375 per cent notes due July 2029 rose to 61.9 cents, after touching a record low of 33.9 cents on May 20.

Apart from the US$420 million bond due next July, Vista Land has a US$450 million debt that will mature in July 2029. For the rest of 2026, the company will need to repay or refinance 12.2 billion pesos of maturing local bonds, according to data compiled by Bloomberg.

While CreditSights views Vista Land’s onshore debt maturities until end-2027 as “largely manageable”, it said that refinancing overseas debts requires a lot of work and will depend on several factors including bank appetite and successful asset sales. If those fail, debt restructuring becomes likely, the Fitch Group firm explained.

“We do not view a liability management exercise as our base case, even though we do not rule it out completely,” CreditSights noted.

Established in 2007, Vista Land has built more than 500,000 homes and its current portfolio includes 45 malls and 56 commercial centres, according to its website.

Villar, a former senator who once ran for the presidency, started a gravel and sand business in 1975 and moved to home selling that later expanded into a network of branded residential estates across the country.

The nation’s corporate regulator earlier this year filed a criminal complaint against his property-holding firm, Villar Land Holdings, its related entities and some executives including Villar himself, for alleged market manipulation, insider trading and misleading disclosures. The tycoon and his family have denied any wrongdoing. BLOOMBERG