Property giant Ayala Land Inc. (ALI) has unveiled its sixth series of Homestarter bonds worth P2 billion, targeting retail investors who wish to set aside funds that may be used as full or partial downpayment for the purchase of an Ayala Land property.
The three-year instruments carry a coupon rate of 4 percent a year, double the current yield on comparable bonds. They are offered to retail investors for a minimum lump sum investment of P50,000 to as much as P5 million.
“We are very pleased to offer yet another series of the Homestarter bonds driven by a goal to give more people innovative options that could fast-track their purchase of an ALI property,” said Bobby Dy, ALI executive vice president and chief operating officer. “Since we issued the bonds,
it has generated close to P1 billion in total sales for ALI, which is a positive indication that people are encouraged to save through the program.”
The public offering has started and will run until May 24. ALI has mandated BPI Capital Corp., China Bank and PNB Capital as underwriters.
Bondholders will earn a bonus credit through the program—a special discount on the net selling price of various ALI properties should the bondholder decide to apply the principal amount and accrued interests,
net of taxes, as downpayment to buy an Ayala Land property.
Since the launch of the maiden Homestarter bonds in 2006, about P1 billion worth of bonds had been converted into residential purchases across all brands Ayala Land Premier, Alveo and Avida. Close to 50 percent of sales from the conversion were under the Alveo brand, 25 percent under Ayala Land Premier and a little less than 25 percent under Avida. “Amaia has also started to come in,” said Augusto Bengzon, ALI corporate treasurer.
As the company continued to innovate on the features of the Homestarter bonds, Bengzon said it also sought to reach as many individual investors throughout the country, which was why three underwriters were named instead of only BPI Capital. “We selected these underwriters as they have strong consumer banking units, which will be in a position to provide the appropriate housing loans and support the bondholders who decide to purchase an Ayala Land property,” Bengzon said.
Bengzon explained that the program would have a good fit with the consumer lending businesses of partner banks. Under a 5-95 program, he said that for every 5 percent of equity put up for home purchase, banks would be willing to finance the remaining 95 percent.
The net yield after tax from the new series of Homestarter bonds is 3.077 percent a year. Those who, for any reason, need to unload their bonds ahead of maturity, can choose to sell them over the counter with the help of the partner banks.