The Philippine Star

ALI eyes new tranche of Homestarte­r bonds

- By IRIS GONZALES

Ayala Land Inc. (ALI), the listed property and mall developer of the Ayala Group, is looking to issue another round of its pioneering Homestarte­r bonds worth P2-to P3-billion, a ranking official said.

In an interview, ALI chief financial officer Jaime Ysmael said the company is planning to do that this year.

The instrument enables bondholder­s to build up full or partial downpaymen­t to buy a residentia­l unit int he future.

“We’re looking at (another round) possibly this year,” he said.

With a total amount of P2-to P3-billion, ALI is looking at issuing a three-year offer.

“It’s not a fund raising activity,” Ysmael said, adding it’s more to help prospectiv­e home buyers raise funds for a seed money that would help them acquire a residentia­l unit in the future.

The coupon rate may be 3.5 percent to four percent, same as in previous offerings of Homestarte­r bonds.

“The rate and terms will be almost the same,” he said.

For a three- year instrument, Ysmael said a 3.5 to four percent rate is attractive enough.

ALI first launched the innovative instrument in 2006, making it the first property company to issue such types of bonds.

It has been issuing the bonds regularly, saying that it has been an effective savings instrument for many bondholder­s.

In the past, eligible investors including the targeted retail investors can buy a minimum of P50,000 worth of the bonds and in multiples of P5,000 or P10,000 thereafter.

ALI has an approved shelf registrati­on for up to P50 billion granted by the Securities and Exchange Commission (SEC), the corporate regulator.

In industry parlance, shelf registrati­on is an option for issuers to register and sell under the same regulatory documents securities which they do not intend to sell right away. The SEC allows for a three-year window.

Under Section 8.1.2 of the 2015 Implementi­ng Rules and Regulation­s of the Securities Regulation Code, securities to be issued in tranches may be registered for an offering to be made on a continuous or delayed basis for a period not exceeding three years.

This affords the issuer companies the flexibilit­y when to offer and sell securities within the three-year period, the SEC said.

The SEC provided this leeway because sometimes current market conditions are not favorable for certain firms to issue public offering.

By using shelf registrati­on, the issuer companies can fulfill all registrati­on-related procedures beforehand and go to market quickly when conditions become more favorable.

ALI’s shelf registrati­on is for future debt securities in the form of commercial paper, Homestarte­r bonds and fixedrate bonds.

Of the shelf registrati­on of P50 billion, an initial tranche of P8 billion in fixed rate bonds will be due 2026.

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