ALI to tap bond market in H1

Property giant Ayala Land Inc. plans to tap the local bond market within the first semester to raise about a third of its P37-billion capital spending budget for 2012.

In a briefing on Wednesday, ALI president Antonino Aquino said the company was inclined to raise P10 billion to P15 billion through a retail bond offering. Also, he said ALI would continue offering the innovative “Homestarter” bonds program this year.

The property firm’s chief finance officer, Jaime Ysmael, added that ALI would issue longer term securities. “Seven to 10 years is the sweet spot that we’re looking at,” Ysmael said.

The capital expenditure plan for 2012 is higher than the P30 billion spent last year, mostly on residential development and land acquisition. The P37 billion budget for this year is earmarked mainly for the completion of ongoing developments, new residential and leasing project launches, and new land acquisitions which are intended to sustain the company’s growth trajectory in the coming years.

Ysmael said ALI might be able to mandate arrangers for the retail bond offering by next week.

About 56 percent of this year’s capex budget is meant for residential development.

For 2012, ALI is expecting the continued rise in demand for residential products. It is thus launching about 24,800 units across all residential brands. In 2011, it brought additional 20,613 units to the property market.

“The residential market will continue to be buoyant this year. We believe that we’re in a much better position to play more actively in the residential space given the breadth of products that we have and our geographic reach as result of our aggressive landbanking across country,” Ysmael said.

Aquino said the “Homestarter” bond program would also continue this year to cater to retail investors wishing to put up seed money to buy residential units.

Under the Ayala Land Homestarter Bond scheme, which aims to boost residential sales while allowing the company to raise fresh funds, investors are required to set aside at least P5,000 a month for the next three years, or a total of P180,000. At any time during the investment period, a bondholder may select an Ayala-developed property under various brands—the upscale Ayala Land Premier and the middle-income Alveo, or Avida property—and apply the bond as payment.

Bond holders are given advance notice of newly launched properties being offered by Ayala Land and the option to acquire choice units. Should a buyer forego that option, cash plus interests will be paid on maturity.