MANILA, Philippines - Property giant Ayala Land Inc.’s planned P15-billion bond issue was assigned a PRS Aaa rating by the Philippine Rating Services Corp., the highest rating on the credit watcher’s scale.
PhilRatings said obligations rated PRS Aaa are of the highest quality with minimal credit risk, as issuer’s capacity to meet its financial commitment on the obligation is extremely strong.
The proposed ALI bonds will be split into two tranches, with seven and 10-year maturities. There will, likewise, be a call feature on the fifth and seventh years for each tranche, respectively.
ALI, likewise, retained its PRS Aaa rating for its outstanding P4-billion bonds.
PhilRatings took into account ALI’s well diversified portfolio, complemented by solid brand equity and a highly experienced management team, sound profitability, coupled with strong cash flow generation and cash reserves and conservative capitalization, with ample room for additional debt.
ALI is one of the largest real estate conglomerates in the Philippines, with over eight decades of experience in the property development sector. The company’s principal strength lies in its involvement in highly diversified business segments such as the development of high to low-end residential, commercial, office, hotel and resort properties.
“Going forward, ALI will have a more active participation in the socialized and economic residential and retail segments, as well as in hotels and resorts. Such will further enhance its business diversification and provide a good buffer in light of property development cycles which typically affect the high-end segments of the property market,” PhilRatings said. The aggregate amount of the issue was set at around P10 billion, with an oversubscription option of up to P5 billion.
BPI Capital Corp. and the Hongkong and Shanghai Banking Corp. were tapped as underwriters for the bond issue.
Net proceeds from the issue will be used to partly support capital spending this year.
The offer will run from April 16 to 20.
ALI has set a record P37 billion capital spending program this year, 23.3 percent more than what it spent in 2011. Bulk of which or 56 percent will go to residential projects, 13 percent (shopping centers), four percent (office buildings), 12 percent (hotels) and the balance of 15 percent (acquisition of new properties).
For this year, ALI intends to launch 24,800 units across all its major residential brands (Ayala Premier, Avida, Aveo, Amaia), signicantly higher than the 20,613 units rolled out in 2011.
ALI also plans to aggressively expand its leasing portfolio as it continues to work on its programmed two million square meters and 750,000 sqm expansion of its shopping centers and business process outsourcing office leasable area, respectively over the next five years.