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Ayala seeks to raise P10B from bond sale this week

Posted on May 02, 2011 09:22:23 PM [ BusinessWorld Online ]
CONGLOMERATE AYALA Corp. seeks to raise P10 billion from the sale of bonds this week, with demand already going over the allocation, the company said in a disclosure yesterday.
Proceeds from the bond sale will be used to buy back P5.8 billion worth of preferred shares which Ayala has promised stockholders to be paid by July.
Ayala unit BPI Capital Corp. has been tapped to be the issue coordinator.
“Indicative demand for the bonds was strong, at an estimated P23 billion. The 10-year bond will mature in 2021, but will have multiple put options in 2016 and 2019,” Ayala said, claiming that this was the country’s first multiple put bond issue.
A put option allows the investors to prompt the firm to pay back the principal amount of the bond even before the maturity date.
The coupon rate for the bonds has been pegged at 6.5%, a price reportedly based on the past 15-day benchmark average plus a spread of 30 basis points, Ayala said.
The bonds will be sold in minimum denominations of P50,000 and in multiples of P10,000 thereafter.
“Proceeds of the bond will be used to refinance the company’s P5.8-billion Preferred ‘B’ Shares whose call option was exercised by Ayala for payment in July 2011,” Ayala said.
The balance from the fund-raising will be used to finance the firm’s working capital requirements, Ayala said.
The bonds will be issued to buyers on May 12.
BPI Capital will be working with the following underwriters for the bond issue, according to Ayala: BDO Capital Corp., Citicorp Capital Philippines, Inc., First Metro Investment Corp., Hong Kong and Shanghai Banking Corp., Ltd., ING Bank, N.V. (Manila Branch), RCBC Capital Corp., and Standard Chartered Bank.
“This issue aims to attract retail investors who want to invest long-term funds,” Ayala said.
The debt stemming from the bond float will come on top of the P148.29 billion in total liabilities which Ayala Corp. incurred as of end-2010.
“Bonds are favorable for them because borrowing from banks is stringent. With bonds, they can go ahead with [the fund-raising],” Claire S. Quiray, analyst at Regina Capital Development Corp., said in a phone interview yesterday.
Shares in Ayala -- whose profits surged by 37% to P11.2 billion due to record earnings from its real estate, banking, water, and car dealership businesses -- fell by P7 to close at P384 each yesterday. -- Neil Jerome C. Morales

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