Ayala Land may issue bonds, tap new loans to raise P19B

Property giant Ayala Land Inc. (ALI) plans to raise as much as P19 billion through a mix of new borrowings in the coming months, taking advantage of softening interest rates during this challenging macroecono­mic environment to refinance older and costlier debt.

“With benchmark rates approaching historical lows and the current system liquidity at close to double the level in 2019, we see an opportunity to further lower our borrowing costs while lengthening our debt maturity profile,” ALI chief financial officer Augusto Bengzon said on Wednesday.

ALI obtained approval from its board of directors to raise this amount through the issuance of retail bonds and/or corporate notes for listing on Philippine Dealing and Exchange Corp., and/or bilateral term loans for the purpose of refinancing outstanding loans.

“We intend to utilize the P19 billion purely for refinan­cing purposes, and this will be either through a debt capital market transaction, a bilateral loan facility, or a combination thereof,” Bengzon said.

“The company has a P4-billion bond and a P2-billion term loan maturing within the next five months, and we are looking to prepay certain existing debt before the end of this year,” he added.

ALI has an existing P50 billion worth of bond shelf registration cleared by the Securities and Exchange Commission in 2019. The unused portion amounts to P29 billion.

The property developer has revised its cash flow projection this 2020 to take into account possible slowdown in residential sales, the rent concessions to mall tenants and the significantly low occupancy of hotels and resorts but net cash flow from operations is still seen more than sufficient to cover lower capital outlays.

The property developer has scaled down its capital spen­ding budget this year to P70 billion from P110 billion, putting on hold new projects, investments and landbanking deals to ensure ample liquidity amid the COVID-19 pandemic.

While ALI is holding off new project launches, it believes it has sufficient inventory in its development pipeline to sell once the situation normalizes, given that it had launched P159 billion worth of projects just last year.

To ensure that the company has ample liquidity, all ALI business units were directed to review their exis­ting plans and immediately implement zero-based budgeting, a method in which all expenses must be justified for each new period.—DORIS DUMLAO-ABADILLA