Ayala group sets retail bond offerings worth P30B

Conglomerate Ayala Corp. has sought regulatory clearance to offer up to P30 billion worth of local retail bonds within the next three years, taking advantage of the record-low interest rate environment to lock in longer-term funds.

Ayala has filed a registration statement with the Securities and Exchange Commission (SEC) for the bond shelf registration. Once approved, the first tranche under this debt securities program will be a retail bond offering worth up to P10 billion.

The base offer of the proposed fixed rate bonds will be up to P6 billion plus an oversubscription option of P4 billion. The planned offering will have three- and five-year tenors.

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, within three years. Capital raising can be done by issuers as they are needed and/or when market conditions are favorable for them.

Ayala’s proposed new retail bond offering obtained the highest issue credit rating of “PRS Aaa” from local credit watchdog Philippine Rating Services Corp.

Obligations rated “PRS Aaa” suggest that the bonds are of the highest quality with minimal credit risk. It signifies that the obligor’s capacity to meet its financial commitment vis-à-vis the obligation is extremely strong.

An aggressive monetary easing by the Bangko Sentral ng Pilipinas to help oil the economy—which saw its steepest recession last year—resulted in a sharp decline in interest rates, which corporate borrowers want to harness.

Ayala, for its part, is set to resume a more aggressive capital spending this year with a budget of P196 billion primarily for emerging businesses, aiming to reclaim a growth trajectory that was disrupted by the coronavirus pandemic that battered its property, banking and telecom crown jewels last year.

Ayala booked a 51-percent drop in net profit last year to P17.1 billion due to the pandemic, although a sustained improvement in sequential earnings was seen in the fourth quarter.

Excluding nonrecurring items, Ayala’s core 2020 net income fell by 16 percent to P26 billion.

In 2020, consolidated capital expenditure amounted to P152 billion, of which P12.1 billion was disbursed by the parent conglomerate, mostly going to the newer businesses.

—DORIS DUMLAO-ABADILLA INQ