Ayala Land raising P10B

Property giant Ayala Land Inc. is returning to the local bond market twice within the next four months to raise P10 billion to refinance older debt paper.

ALI obtained approval from its board to offer P3 billion worth of its innovative “Homestarter” bonds and another P7 billion in regular fixed-rate bonds.

The new Homestarter bonds will have a tenor of three years while the new tranche of retail bonds will have a tenor of seven years, ALI chief finance officer Jaime Ysmael said in a text message.

“Target issuance for both (Homestarter and fixed-rate bonds) is end-third quarter to early fourth quarter,” Ysmael said.

“Proceeds will be used to retire short-term debt as part of our liability management program. Hence, there is no incremental debt to be incurred,” he added.

ALI’s pioneering Homestarter bonds target 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.  Bondholders 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 a downpayment to buy an Ayala Land property. For those who need to unload their bonds ahead of maturity, the bonds can be sold over the counter with the help of partner-banks.

In previous offerings of Homestarter bonds, eligible investors, whether Filipino citizens or resident foreign individuals, could buy a minimum of P50,000 worth of such bonds and in multiples of P10,000 thereafter.   The maximum investment was P5 million.

The P7 billion new retail bond offering is the third tranche of the P50-billion borrowing program approved by the Securities and Exchange Commission under a “shelf registration” program.

Under the shelf registration mechanism, securities to be issued in tranches may be registered for an offering to be made on a continuous or delayed basis for a period not exceeding three years.  The issuer is allowed by the SEC to use the same prospectus for various tranches of securities offering.

Earlier this year, ALI has completed two tranches of bond offerings amounting to a combined P15 billion. Last May, ALI listed on the Philippine Dealing & Exchange Corp. P7 billion worth of fixed rate bonds which were issued at a tenor of slightly less than 10 years at a fixed rate of 4.75 per annum.  Last March, ALI raised an initial P8 billion in 10-year bonds at a fixed rate of 4.85 percent per annum.

ALI separately launched the two subsequent offerings to test the market for shelf registration.

Meanwhile, ALI’s board also approved the declaration of cash dividends of P0.238 per outstanding common share. This brings full-year dividends to P0.476 per common share, reflecting a 15 percent increase from last year’s regular cash dividends and payout ratio of 40 percent of prior year’s earnings. The cash dividend will be payable on Sept. 16 to stockholders of common shares as of record date Sept. 2 this year.