Ayala Corp starts issuance of P10-B multiple put bonds

MANILA, Philippines - Ayala Corp. started yesterday the issuance of P10 billion worth of multiple put bonds, with indicative demand for the bonds estimated at P23 billion.

 “The issue is the first in many aspects – the first multiple put bond in the market and the first corporate issue for 10 years for a P10-billion size. Our bond also has the lowest coupon rate of 6.8 percent,” said Ayala treasurer Ramon G. Opulencia.

The 10-year bonds will mature in 2021 but have multiple put options in 2016 and 2019.

This issue aims to attract retail investors who want to invest long-term funds. The bond structure provides two liquidity features, first through the 20 percent partial put option on the fifth year and subsequently the 100 percent full put option on the eighth year. This encourages investors to go beyond the normal five-year tenor. As an incentive for longer tenor, investors get a better rate compared to the five-year rate of around one to 1.25 percent, and with an option to hold on to the same rate up to 10 years.

Proceeds from the bond issue will be used to refinance the company’s P5.8-billion preferred “B” shares whose call option was exercised for payment on July 2011. The balance will be used to fund Ayala’s working capital requirements.

The offering will run from May 2 to May 6, with issue and listing date set for May 12.

The pricing of the bonds was based on the past 15-day average of the PDST-R2 plus a spread of 30 basis points, consistent with the latest auction results for the 10-year fixed rate Treasury notes which had a rate of 6.50 percent.

Ayala tapped BPI Capital Corp. as the issue coordinator for the deal. The joint underwriters are BDO Capital Corp., BPI Capital Corp., Citicorp Capital Philippines Inc., First Metro Investment Corp.., Hong Kong and Shanghai Banking Corp. Ltd., ING Bank, N.V., Manila Branch, RCBC Capital Corp. and Standard Chartered Bank.