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Ayala Land seeking SEC approval for P504-million bond offering

Thursday, August 13, 2009 | MANILA, PHILIPPINES [ BusinessWorld Online ]


LISTED PROPERTY giant Ayala Land, Inc. is seeking the Securities and Exchange Commission’s (SEC) approval to raise P504 million in fresh funds through the sale of bonds to the lower- and middle-income segments, to give them an investment alternative to bank deposits.

The property developer said it would sell the bonds — named Ayala Land Homestarter Bond — over 36 months starting on Oct. 16, to be facilitated by BPI Capital Corp. as the issue manager and underwriter.

The company launched its first Homestarter Bond, a fund- building program to help prospective buyers of homes built by Ayala Land and its subsidiaries raise the required downpayments.

Ayala Land said it expects the initial net proceeds to only reach about P9.4 million, while the balance would be P13.7 million for each month over the offer period.

The company said the scheme intends to benefit the low- to middle-income market segment, by offering alternative investment and savings options to bank deposits.

"Ayala Land’s objective is to encourage this segment to save sufficient funds to enable them to own real estate in the future. To make the bonds more affordable to the target market, it shall be issued in a series, and the different series of the bonds shall be issued against monthly payments by the bondholders over a period of three years," the firm said.

Ayala Land noted that people may buy a bond for P5,000, which will pay a 5% interest, compared to the 0.5% to 0.75% in a savings account and 2% to 2.5% in a time deposit account.

Bondholders who had also bought a property from Ayala Land and its subsidiaries get a 10% bonus credit on the total principal invested, added on as part of the downpayment, once the debt matures.

Clients were also given the choice to buy property even before the end of the three-year term.

In the second quarter, Ayala Land’s first-half profits declined to P2.07 billion, from P3.13 billion last year, after revenues slid by 6% to P14.39 billion due to the lack of nonre-curring gains from the sale of shares in subsidiaries.

The company’s shares closed flat at P9.40 apiece yesterday. — Don Gil K. Carreon

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