ALI sets P15-B borrowings in H2

MANILA, Philippines - Property giant Ayala Land Inc. (ALI) is tapping the debt market in the second half to borrow P15 billion as it takes advantage of the prevailing low interest rate environment.

The fundraising program will complete the P65.5-billion capital requirements of the country’s most valuable property firm for 2013, an executive said.

“We still have some borrowings that we plan for the rest of the year,” Jaime E. Ysmael, ALI senior vice-president chief finance officer told The STAR.

“ALI itself will probably need around P15 billion and the subsidiaries will have their own borrowing program,” Ysmael said.

The property firm allotted P65.5 billion in capital expenditures this year as it plans to launch 69 new projects worth P129 billion to ensure continuous growth in the coming years.

Ysmael said ALI’s return to the debt market will be in the second half “because we have enough resources right now coming off from the equity placement,” Ysmael said.

“We are looking at seven and 10 years of maturity or maybe longer to match the development cycle,” Ysmael said.

In an overnight equity placement in March, ALI generated P12.2 billion in fresh funding as it sold 399.528 million shares at P30.50 a piece, way above the initial target of 320 million shares amid high demand.

In its capital spending, ALI planned to secure P12 billion from equity, P20 to P25 billion from debts and the remaining requirement from internally-generated cash, Ysmael said.

Philippine companies have been tapping funds from different channels like bonds and banks amid low interest rates and high liquidity. Last week, conglomerate SM Investments Corp. announced its plan to raise P25 billion through loans and bonds.

“We intend to lock in on good rates. We believe the rates will still remain low, supportive of the more aggressive investments,” Ysmael said.

However, ALI is careful not to let its annual maturing debts reach more than P10 billion as part of its debt refinancing and payment management, Ysmael said.

In March, the policymaking Monetary Board of the Bangko Sentral ng Pilipinas kept interest rates at a record low of 3.5 percent for overnight borrowing and 5.5 percent for overnight lending.

It also cut the interest it pays on funds parked at its special deposit accounts (SDA) in a bid to push out idle funds to help fund economic activity and boost growth amid a benign inflation environment.

The real estate arm of the Ayala conglomerate is set to continue this year the trend of double-digit growth in revenues and profits.

Earnings of ALI surged 27 percent to P9.04 billion last year from P7.14 billion in the previous year as revenues from its residential, hotel, office and commercial projects jumped 23 percent to P54.52 billion.

ALI is wrapping up its 5-10-15 program which was launched in 2009 amid the global financial crisis. It is a five-year plan ending in 2014 that aims to boost net income to P10 billion return on equity to 15 percent.