Ayala Land Inc. (ALI) will raise at least P20 billion from the debt market this year to help fund the redevelopment of its flagship malls and support its sustainability-related programs.
Jose Eduardo Quimpo II, vice president and treasurer of ALI, on Thursday told reporters they were expecting a P14-billion investment from International Finance Corp. (IFC) alone.
“We’re trying to close [the deal] within this week, maybe in 24 to 48 hours,” Quimpo said, adding that IFC’s investment would be part of a sustainability-linked financing program.
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According to him, the P14-billion bond issuance that will be taken solely by IFC, the private sector lending arm of the World Bank, will mature in eight years.
ALI has already raised P6 billion from the debt market this year, following its issuance of Asean sustainability-linked bonds that were listed on the Philippine Dealing and Exchange Corp. also on Thursday.
These are due in 2034 with an interest rate of 6.9931 per year, ALI’s offer supplement showed.
Augusto Bengzon, the real estate giant’s chief financial officer, said they deliberately waited until the second half of the year to return to the bond market.
Bengzon said they anticipated that “market conditions would be so much better” in this semester.
“We are delighted that this sustainability-linked bond was well-received, as investor demand at the clearing price of 30 basis points (bps) reached P18 billion, or three times the P6-billion offer,” the CFO said during the listing ceremony.
Interest rates are expected to ease within the second semester, based on dovish signals from the Bangko Sentral ng Pilipinas.
Lower interest rates are typically good for debt issuers, as these translate to higher bond prices.
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However, Quimpo clarified that they had to meet certain targets—get a zero-carbon certification for its building designs by next year and reduce carbon emissions in its properties by 42 percent by 2030—to ensure that interest rates remain favorable to ALI.
Under the company’s sustainability-linked framework, interest rates will increase by 5 bps or 0.05 percentage point for each unmet target.
Given ALI’s target of spending around P100 billion this year for new projects, Bengzon also hinted at the possibility of another bond issuance.
“Let’s see. Our capex (capital expenditure) program this year stands at P100 billion, so that will be funded by a combination of internally generated cash and some financing,” he said.
The property firm earlier said it would spend P13 billion to renovate and reinvent four major malls—TriNoma in Quezon City, Glorietta and Greenbelt in Makati, and Ayala Center Cebu. Greenbelt 1, one of its oldest malls, was shuttered on April 1 to start renovation work.
ALI also intends to launch P100 billion worth of projects this year, of which 80 percent will be under its premium brands, Ayala Land Premier and Alveo Land.
ALI has so far launched four projects worth P13.7 billion. —Meg J. Adonis