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ALI's P4-billion bond issue retains highest rating

By Zinnia B. Dela Peña (The Philippine Star) Updated March 24, 2010 12:00 AM

MANILA, Philippines - Domestic credit rating agency PhilRating Services Corp. has retained its PRS Aaa rating for Ayala Land Inc.’s P4-billion bond issue.

Obligations rated PRS Aaa are of the highest quality with minimal credit risk, as the issuer’s capacity to meet its financial commitment on the obligation is extremely strong. PRS Aaa is the highest rating on PhilRatings’ scale.

Among the factors PhilRatings considered in issuing the rating are ALI’s strong cash flow and liquidity; sound capitalization structure; solid brand equity and seasoned management; positive industry outlook; and healthy profitability.

PhilRatings said it shall continue to monitor the rating it has assigned, and can change its rating at any time should circumstances warrant such a change.

Rating ALI’s cash flow generation continues to be strong, with internally-generated cash providing more than sufficient coverage for current debt servicing requirements.

PhilRatings also notes that since the bonds were initially rated in 2008, current ratio of ALI has been kept at a minimum of 1.5x, reaching 1.95x as at end-2009.

The continued growth in ALI’s recurring income base from its shopping centers and office leasing businesses support expectations that cash flow generation will continue to be strong, going forward.

“Leverage remains conservative based on a minimal net debt-to-equity ratio of 0.06x, as at end-2009. The company’s balance sheet continues to be robust, and provides sufficient room to take on more debt to support growth plans over the next few years. ALI has been managing its debt profile effectively, with 91 percent in long-term debt as at end-2009,” PhilRatings said.

The Ayala brand provides a premium boosting ALI developments, and is a major competitive advantage over other domestic real estate companies. ALI is the only full-line real estate developer in the Philippines with a major presence in almost all sectors of the industry.

The country’s property sector is expected to post growth in 2010, as the effects of the global financial crisis begin to ease. Higher remittances from overseas Filipino workers and the growth in outsourcing firms are seen to boost the real estate market.

ALI has set a record capital expenditure budget of P27.2 billion this year o cover expenses related to the launch of new residential and leasing projects as well as some possible land acquisitions “as the company aims to further broaden its presence in the country.”

The 2010 capex, which is 68 percent higher than the amount spent the previous year, includes the company’s entry into the development of boutique hotels with the first one to rise in the booming Bonifacio Global City.

ALI is eyeing P40 billion in sales from the 9,200 residential units to be disposed off this year which comprise all lines of its business units – Ayala Land Premier (which is best known for its exclusive and distinctive developments that appeal to the high-end market), Alveo Land Corp. (which targets the young urban professionals), Avida (which caters to middle-income families aspiring to own their first home), and the newly-launched Amaia (which caters to the economic housing segment).

Amaia’s initial project – Amaia Scapes – will offer 2,000 units that will rise on 20-hectare property in San Pedro, Laguna priced at between P600,000 and P1.2 million. The first 1,300 units will be launched within the year, targeting families that have a combined household income of P15,000 to P50,000 per month.

ALI has earmarked P1 billion over the next three years to develop six projects in selected industrialized rural areas in Southern and Central Luzon, where demand for housing is expected to be strong.


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