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Ayala Land mulls new debt paper sale

Thursday, 20 January 2011 00:00 [ ]
AYALA Land Inc. (ALI) may return to the market to raise additional funds to finance its record capital expenditure program for the year.
Jaime Ysmael, ALI chief finance officer, told reporters the property giant was looking at a retail bond offering or a global peso debt paper sale as other fund raising options after recently raising P10 billion from the issuance of fixed-rate corporate notes.
“Whether we’ll tap the markets again is dependent on how the cash flows happen, but at least we have the initial funding,” Ysmael said.
On Tuesday, ALI announced that it sold the fixed-rate corporate notes to primary institutional lenders amid an oversubscription of 78 percent to P17.5 billion.
Proceeds of the offering will be used to finance project expenditure and working capital.
The real estate firm’s capital expenditure will be “much larger” than its P27 billion in 2010.
“[It is] an indication of the level of activity we expect for the year,” Ysmael said.
Demand for housing projects continues to be strong across all market segments, but ALI sees that bulk of the volume of its launches this year will come from its affordable housing brand, Amaia.
“Amaia is serving the lower end of pyramid, which is a larger market. Our launches will reflect the same type of pyramid, the same type of relationship,” he added.
The Bangko Sentral ng Pilipinas is expected to hike interest rates by the second half, but Ysmael said this will not be felt by the market because liquidity is very high, with more than P1 trillion parked in special deposit account.
ALI is also working on launching another tranche of the Homestarter bonds to encourage customers to build capital for future residential and condominium down payments.
“It will be part of the strategy because as we launch more units, we need to build up the customer base,” said Ysmael.
ALI’s income in the first nine months of 2010 reached a record P3.94 billion, up 35 percent from P2.92 billion in 2009 on the back of the strong growth of its residential and leasing business.
Its shares fell from P15.74 on Tuesday to P15.10 each on Wednesday.

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