Ayala Land aims to raise up to P10B via sale of 4-year bonds

Property giant Ayala Land Inc. (ALI) is returning to the local bond market with an offering of up to P10 billion in four-year bonds, taking advantage of record-low interest rates to retire some debt ahead of maturity. This offering will use up the bulk of the remaining bonds it is allowed to issue under a P50-billion shelf registration cleared by the Securities and Exchange Commission (SEC) in 2019. This will be the sixth tranche out of the securities shelf program.

Based on a preliminary prospectus dated March 12 submitted to the SEC, ALI plans to use the proceeds mainly to pay short-term loans drawn to finance the early redemption of P8 billion worth of bonds issued in 2014. These bonds which carried a fixed interest rate of 5.625 percent a year were not due until 2025, but the sharply lower interest rate regime offered an opportunity for ALI to significantly lower its financing cost.The rest of the proceeds will be used for general corporate requirements, including the development of land acquired by Alveo Land in Laguna and Cavite as well as a new project of Avida Land in Quezon City.

ALI has mandated BDO Capital, BPI Capital, Chinabank Capital, Eastwest Bank and SB Capital as joint lead underwriters and bookrunners for this fund-raising.

The last time that ALI tapped its existing shelf registration program was in September 2020 when it issued P6.25 billion worth of bonds. Even at the height of the coronavirus pandemic uncertainties last year, ALI was able to tap this shelf program in June 2020. It was then the first corporate issuer to brave the local bond market, raising P10 billion from a two-year bond at a coupon rate of 3 percent a year.

ALI has so far used up P37.25 billion of the P50-billion shelf and has stated plans to replenish the shelf soon with another P50 billion worth of securities.

Under the SEC’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. 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. INQ