(Source: Business World | 18 October 2016)
Ayala Land, Inc. is looking to issue commercial papers worth at least P5 billion next year, as it advances leasing projects expected to deliver more cash flow and subsequently slash the need for external funding beyond 2020.
The commercial papers will come from a P50-billion shelf offering tapped for retail and homestarter bond issuances so far, Ayala Land Head of Debt Management Ricardo Ulysses Tabije told reporters during an Oct. 7 interview.
“Maybe the minimum would be around P5 billion for a commercial paper issuance,” Mr. Tabije said.
Ayala Land will have issued fixed-rate retail and homestarter bonds cumulatively worth P25 billion by yearend under the P50-billion shelf registration approved by the Securities and Exchange Commission in March.
The company first offered P8 billion worth of fixed-rate bonds due 2026. It then issued 4.75% bonds due 2025 amounting to P7 billion and another P7 billion of 3.8915% bonds due 2023.
Ayala Land is returning to the debt market with P3 billion worth of homestarter bonds within the month, becoming the first company to list four issues on the fixed-income bourse in one year.
Asked if the property developer intends to issue another tranche from the P50-billion shelf offering next year, Mr. Tabije said: “Yes, definitely. Definitely there will be, but we are still in the drawing board right now.”
“We’re still finalizing the capex (capital expenditure) program, but Ayala Land has always raised its funds through the debt capital market,” Mr. Tabije added.
Ayala Land’s shelf registration will remain valid until 2019. The company may issue fixed-rate retail bonds, homestarter bonds or commercial papers to exercise the P25 billion remaining of the three-year debt program.
“One other series that we haven’t tapped into yet is the commercial paper. We may have the commercial paper series next year,” Mr. Tabije said.
The proposed commercial papers, which mature within the year following their issuance, will cover the capital spending program and complement the short-term credit lines of the property arm of the Ayala Group.
Ayala Land also continues to consider tapping sukuk bonds to advance investments in Malaysia, with Mr. Tabije noting: “We’re just waiting for opportune time to be able to access that market.”
“We did explore it early this year but we have to defer it because, as you know, you have to borrow it out of Kuala Lumpur because it’s a restricted currency and right now the interest rates are quite elevated, so it’s more advantageous to borrow… locally.”
Ayala Land is focused on developing 19 mixed-use estates in line with a strategy to increase its recurring income, the company’s head of investor relations, Michael Anthony L. Garcia, noted during the Oct. 7 interview.
“A bulk of the leasing assets should be completed around 2019, so it should start to contribute around 2019 or 2020. That should increase our cash flow so that when we move the growth going forward, we’ll rely less on external funding.”
In the first six months, Ayala Land netted P9.74 billion or 16% above the P8.39 billion recorded a year earlier, following an 8% increase in revenues to P54.76 billion from P50.61 billion.
Income from the company’s property development business rose 6% to P33.66 billion from P31.85 billion during the semester, while that from commercial leasing segment jumped 12% to P12.76 billion from P11.40 billion.
Shares in Ayala Land closed 65 centavos or 1.76% lower at P36.20 apiece on Monday, tracking a general decline in the bourse.
– By Keith Richard D. Mariano