After raising P10 B from sale of notes ALI plans more fund-raising exercise

MANILA, Philippines – Ayala Land Inc. is considering other fund raising options to finance what it expects to be a record capital expenditure program this year.

In an interview, ALI chief finance officer Jaime Ysmael said that, while the firm was able to raise P10 billion from a notes issue this week, the firm may still come back to the market for more funds.

“It depends on how projects pan out for the rest of the year. We might still come back to the market depending on how disbursements happen, but it's (P10 billion) a sizeable amount already. Whether we'll tap the markets again is dependent on how the cash flows happen’ but at least we have the initial funding,” he said.

ALI spent a record P27 billion for capex and launched 30 new projects last year. Ysmael expects capex this year to be ‘much larger’ than that spent in 2010. For ALI’s other funding options, Ysmael said ALI has a retail bond initiative that is meant to be widely distributed. He added that a global peso float is also another option since it is becoming popular.

Ayala Land raised P10 billion through an issuance of fixed-rate corporate notes, which was offered to primary institutional lenders. The fundraising consisted of P5.7 billion in 5-year notes, P3.3 billion in 10-year notes, and P1.0 billion in 15-year notes.

Strong investor demand for the offering led to orders amounting to P17.5 billion, which represented an oversubscription of 75 percent, allowing ALI to award at competitively low rates during the auction for the notes.

Interest rates were set at 5.625 percent for the 5-year notes, 6.875 percent for the 10-year notes, and 7.500 percent for the 15-year notes.

Ysmael said ‘we wanted to capitalize on the interest rate environment to lock in the cost. The thing that we wanted to highlight is its the first time for a Philippine corporate to tap a 15 year market. The longest available for project financing is 12 years, indicative that there is appetite and liquidiy.”

He explained that the issue had a liability management component. “Part of the offering was used to pre-terminate 5 and 10 year loans. There were institutions who were willing to pre-terminate. This not only to lower the cost of borrowing overall, but we also extend the tenor or maturity,” Ysmael said. (JAL)

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