Vol. XXII, No. 7 [ BusinessWorld Online ]
Tuesday, August 5, 2008 | MANILA, PHILIPPINES
AYALA LAND, Inc. yesterday started offering P4 billion worth of fixed-rate bonds, which analysts said would likely be snapped by investors.
The realty arm of the country’s largest conglomerate set the rate for the bond issue at a fixed 8.75%, ahead of its announcement of results for the second quarter next Monday.
"More than the expected number of investors are likely to avail themselves of the bond," an analyst said, citing the firm’s name and strong business portfolio.
The offer, set to end on Friday, was arranged by BPI Capital Corp., HSBC and Land Bank of the Philippines. It will be the first listing of a new corporate bond on the domestic fixed-income exchange, the Philippine Dealing and Exchange Corp.
Proceeds of the offer will partly fund the company’s residential, mall development and office building projects.
In a statement, the company said the move would likely appeal to retail investors seeking options for their long-term savings.
The Ayala unit will offer the bonds at 100% of their face value where minimum subscription is set at P50,000 and P10,000 for succeeding subscriptions. The debt paper will mature in five years.
Ayala Land Treasurer Augusto D. Bengzon said the bond would support the company’s growth plans.
Jaime Ysmael, company chief finance officer, said on Friday Ayala Land would raise P2 billion more in borrowings to complete its financing requirements this year.
Ayala Land, builder of upscale malls, residential compounds and office and residential buildings, plans to spend P24.3 billion this year, the bulk of which will be generated internally.
Ayala Land earlier told the corporate regulator it expects net proceeds from the offering to reach P3.96 billion.
It said it would launch 5,622 residential units or 8% more than the 5,182 units it launched last year, and plans to aggressively expand its shopping centers.
The company is also expanding its work on business process outsourcing offices in the next three years.
For the first quarter, revenues of the country’s biggest property developer went up by almost a third to P8.23 billion from a year earlier. For residential units alone, sales reached P3.5 billion from bookings of 1,000 units from 50 projects, a fifth higher than a year ago.
Meanwhile, sales from Ayala Land’s shopping centers amounted to P1 billion, while sales from its corporate business reached P272 million — 17% higher than a year earlier due to higher office occupancy and rental rates, as well as higher fee income from managed buildings.
Ayala Land shares gained 2.5% or 25 centavos to P10.50 yesterday. — Kristine Jane R. Liu
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