“Ayala Land, Inc.’s (ALI) proposed P2.0 billion bonds are rated PRS Aa,†PhilRatings announced. ALI intends to issue up to P2.0 billion in bonds for re-financing purposes, as well as to fund various development projects. The term of the bond will be 5-7 years. Lead underwriter is BPI Capital Corporation.
A PRS Aa rating means that the issue has large margins of protection. Fluctuations of protective elements, however, may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than for PRS Aaa-rated securities.â€
The rating reflects ALI’s strong business franchise, balanced asset portfolio, stable earnings profile, conservative capital structure, and well-defined business strategy that has seen the company through currently depressed market conditions. With rental properties contributing recurring earnings and a strong brand equity supporting sales of development properties, earnings generation remains satisfactory. Interest coverage has been maintained at a more than adequate level despite the inherent volatility in the property development sector.
ALI remains cognizant of the implicit risks in the business and as such, seeks to build further its recurring income streams through the expansion of its retail rental properties while also increasing its focus on the more resilient mass housing segment and venturing into the core mid residential market. The company’s capital structure remains conservative although the scheduled payment in March-April 2002 of about P6 billion in outstanding long-term commercial papers (LTCPs), about two thirds of its aggregate debt, indicates substantial re-financing needs.
The rating on its P6 billion in LTCPs is likewise being maintained though, as ALI has already started to put in place funds for the re-payment of these obligations. These funds will augment ALI’s existing cash levels in meeting the LTCPs upon maturity.