Ayala Land unveils new bond program to pay old debts

MANILA, Philippines — Ayala Land Inc. announced a new borrowing program meant to pay old debts and partially fund corporate expenses amid the pandemic.

At its meeting on Friday, the company’s board of directors approved a plan to borrow up to P45 billion from investors via retail bonds and/or corporate notes, regulatory filing showed. The property giant also has an option to raise the cash through bilateral term loans.

Proceeds from the upcoming fundraising activity will be used to partially finance “general corporate requirements” and settle debts that are falling due soon, Ayala Land said.

At the same time, Ayala Land’s directors approved a new, 3-year bond program amounting to P50 billion.

The company’s announcement came at a time central banks around the world are aggressively raising interest rates amid a painful battle against red-hot inflation. At home, the Bangko Sentral ng Pilipinas has jacked up its key rate to 5%, the highest in almost 14 years.

That compares with the US Federal Reserve's policy rate of 3.75%-4%.

Rate hikes are typically bad for businesses that are looking to borrow money to fund their expansion. For landlords like Ayala Land, the rate increases could temper demand for residential products because banks would charge higher interest for home loans.

But Ayala Land said it is weathering the high interest rate environment. The company earlier reported that reservation sales from its residential segment grew 10% year-on-year to P77.3 billion in the first three quarters of the year.

Filipinos were the biggest homebuyers during the period, the company said, with a 65% share to total sales. Overseas Filipino workers accounted for 22% of overall residential sales while foreign buyers cornered the remaining 13%.

Ayala Land also said its debt pile remains manageable, with 97% of its liabilities carrying long payment terms while 94% are locked in fixed rates.

As of market recess, shares in Ayala Land were trading flat at P29.30 each. The main index was up 0.21%.