Ayala Land sets return to bond market
Property giant Ayala Land Inc. (ALI) is poised to return to the local bond market soon and seek P50 billion in fresh bond shelf registration to support refinancing activities and take advantage of the slowdown in local interest rates.
At a press briefing on Wednesday, ALI chief financial officer Augusto Bengzon said the property developer would soon launch a four-year bond offering, with a target to raise P6.25 billion.
“And we are going to refresh our shelf registration. We are going for another P50 billion to refresh our shelf,” Bengzon said.
Under the Securities and Exchange Commission’s shelf registration window, securities may be registered for an offering to be made on a continuous or delayed basis, or in tranches, for a period not exceeding three years. Capital-raising can be done by issuers as they are needed and/or when market conditions are favorable for them.
Recovery Preparing for a V-shaped recovery in its businesses, ALI plans to spend about P88 billion for capital outlays this year, larger than the P63.7 billion spent in 2020, when it slashed capital expenditures to conserve liquidity amid the coronavirus pandemic.
“Our fund-raising this year will be skewed more toward refinancing. In terms of incremental borrowings, we are only looking at something like P8 billion to P10 billion, but our refinancing initiatives will be in the vicinity of about P30 billion,” Bengzon said.
“What we’re doing is we are actively preterminating high-cost debt and we are going to replace it with lower-cost debt. As you know, the interest rates have come down significantly and we’d like to take advantage of the opportunities that this presents,” he added.
Bengzon noted that even as the pandemic erupted in 2020, ALI was the first corporate issuer to brave the capital market, raising P10 billion in June last year from a two-year bond at a coupon rate of 3 percent. This was followed by another five-year bond issuance.
“Clearly there was interest on a name like Ayala Land even during a crisis period,” Bengzon said.
“Since then the rates have gone down further and we’d like to refinance our more expensive debt.”
While ALI does not have a lot of costly debt, Bengzon said there’s still some opportunities for refinancing given that benchmark rates have gone down.“So we will be actively refinancing both our capital market debt as well as some of our bilateral [loans],” he said.
ALI expects most of its businesses to return to prepandemic levels in two to three years.
This year, ALI expects to bring about P100 billion in fresh inventory to the property market, mostly residential offerings.
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