Ayala Corp. marks return to dollar bond market

AYALA CORP. returned to the dollar bond market on Thursday, as it launched its $400-million fixed-for-life senior perpetual notes.

In a disclosure to the stock exchange on Thursday, the country’s oldest conglomerate said the issuance is the first corporate fixedfor-life bonds with no coupon stepup in Southeast Asia, as well as the first fixed-for-life with no step up (and reset) deal in the Philippines.

Ayala priced the perpetual notes, which will be issued by wholly- owned subsidiary AYC Finance Limited and guaranteed by the parent, at an annual coupon rate of 5.125% for life with no step-up.

“The pricing of the notes ref lected a 50- basis point compression from initial price guidance,” the company said.

Perpetual bonds are fixed income securities with no maturity date, which means that they never expire. The principal for this bond will never be repaid to investors, but instead will have a stream of interest payments forever.

Ayala said the offering was over five times subscribed in the international debt market, which it attributed to investors’ confidence in the company.

“This successful launch of fixed- for- life notes provides us with the financial flexibility to manage our sources of capital. We are grateful for the continued support we have received from our investors that is reflected in this issuance,” Ayala Corp. Chairman and Chief Executive Officer Jaime Augusto Zobel de Ayala was quoted as saying in a statement.

Bulk or 71% of the investors hailed from different Asian countries, while 19% came from the Philippines and the rest from Europe. In terms of type of investors, 67% were fund or asset managers, 12% were banks, 7% were insurance and pension funds, while 14% were private banks and other investors.

“Finding favorable conditions in a volatile credit market allows Ayala to optimize its average cost of funding while extending its debt maturity profile,” Ayala Corp. Chief Finance Officer Jose Teodoro K. Limcaoco said in a statement.

The company looks to settle the transaction by Sept. 13.

Ayala tapped Hongkong and Shanghai Banking Corp. Limited ( HSBC) as global coordinator. Deutsche Bank A. G., Singapore Branch, HSBC and JP Morgan Securities plc were engaged as joint lead managers, while BPI Capital Corp. and Chinabank Capital Corp. acted as domestic lead managers.

Ayala Corp. reported its first- half attributable profit stood at P15.06 billion, 9.35% higher than the P13.77 billion it posted in the same period a year ago.

Shares in AC gained P3 or 0.33% to P915 each at the Philippine Stock Exchange on Thursday. —