Ayala set to issue P15B in bonds by end-April

Conglomerate Ayala Corp. is set to issue up to P10 billion in 15-year bonds by the end of this month, providing it with additional cash to expand its portfolio, particularly in its new growth areas of power generation and infrastructure development.

“We hope to be in the market in the next couple of weeks,” Ayala Corp. chief finance officer Delfin Gonzales said in a briefing.

Ramon Opulencia, Ayala treasurer, said the company hoped to secure the approval of the Securities and Exchange Commission this week and go to market by April 30.

The proposed bond issue will be redeemable via call options starting in the 10th year and every year thereafter until the 14th year.

The proposed fixed rate bonds due in 2027 were given the highest credit rating of triple A from Philippine Rating Services Corp.

Obligations rated “PRS Aaa” are deemed of the “highest quality with minimal credit risk” and the obligor’s capacity to meet its financial commitment is “extremely strong.”

In a statement, PhilRatings said this rating on Ayala’s upcoming bond issue considered the sustainable and strong recurring earnings of the conglomerate as well as cash flows from key subsidiaries and affiliates.

The credit watcher also noted the company’s “sound capitalization, multiple layers of financial flexibility, improved debt and debt service profile, value enhancing and risk-mitigating investment management strategies as well as solid brand equity and strong management team.”

The rating firm said Ayala’s share in the profits from its diversified portfolio of investments in key subsidiaries and associates—such as Ayala Land, Inc., Bank of the Philippine Islands, Globe Telecom and Manila Water Co.—continued to strengthen the holding company’s profitability profile.

Ayala Corp.’s consolidated revenue grew by 9.6 percent to P107.5 billion in 2011 and recurring net income likewise increased by 16 percent year on year to P8.8 billion.

The rating firm said cash income derived from dividends paid out by Ayala’s investee companies also sustained the firm’s cash position.

Together with the prudent application of its liability management strategy, the rating firm said Ayala has maintained enhanced financial flexibility and a healthy capital structure that is well placed to support its growth initiatives.

“Ayala continues to harness its well-regarded integrity and strong brand equity given its 178-year track record of demonstrated resiliency, ability to progressively adjust to the changing environment, marked competence, and its high level of transparency and corporate governance.  As a holding company, Ayala continuously seeks opportunities for expansion, both through organic growth of its existing business lines, as well as through transactions and acquisitions that would add value to the company and to the Ayala group as a whole,” it said.