“Ayala Land, Inc.’s (ALI) proposed short-term commercial paper issue (STCP) amounting to P2.0 billion is rated PRS 1,†PhilRatings announced as it also maintained the PRS Aaa ratings for ALI’s outstanding P3.0 billion bonds, maturing in 2007 and its P2.0 billion bonds, maturing in 2008. At present, ALI has an existing P1.0 billion STCP issue and this will be replaced by the P2.0 billion STCP being applied for. Both PRS Aaa and PRS 1 are the highest ratings possible in PhilRatings’ long-term and short-term rating scales. PRS Aaa is defined as: “with the smallest degree of investment risk. Interest payments are protected by a large or by an exceptionally stable margin and principal is secured. While the various protective elements are likely to change, such changes as can be visualized are unlikely to impair the fundamentally strong position of such issues.†PRS 1 likewise means that ALI has the strongest capability for timely payment of both principal and interest on its STCPs.
The ratings reflect ALI’s ample liquidity and debt coverage measures given the company’s strong internal cash generation and moderate use of debt. Solid earnings generation is supported by ALI’s diversified property portfolio and sound business strategy. As of year-end 2003, ALI’s consolidated cash balance amounted to about P4.9 billion while net cash provided by operating activities amounted to P3.3 billion in 2003, demonstrating sufficient coverage of debt in the near-term. While ALI’s consolidated debt increased significantly from P10.9 billion in 2002 to P14.4 billion in 2003, net debt to capitalization still remains quite moderate. ALI’s debt service needs over the medium-term continue to appear manageable given the company’s continuing financial flexibility.
ALI’s rental portfolio generates significant levels of recurring income and heightened property development activity, even in the light of ALI’s increasing debt load, is seen to contribute to improved performance given the strong take-up of its existing projects. The established ALI brand name serves the company in good stead in a more stable domestic property market, even amid keener competition.