PDEx okays listing of Ayala's P10-billion put bonds

MANILA, Philippines -  Philippine Dealing and Exchange Corp. (PDEx), the country’s fixed-income exchange, has approved the listing of Ayala Corp.’s P10 billion fixed-rate multiple put bonds.

In a disclosure to the Philippine Stock Exchange yesterday, Ayala said the approval would pave the way for the secondary market trading of the bonds with a coupon of 6.8 percent starting today.

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

The listing of the bonds will widen the reach of price discovery and transparency for the Ayala issue and enables participation across all markets on PDEx.

The issue aims to attract retail investors who want to invest in 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 eight year. This encourages investors to go beyond the normal five-year tenor. As an incentive for going longer tenor, investors get a better rate compared to the five-year rate of around 1 - 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 the conglomerate’s working capital requirements.

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 6.5 percent.

Ayala tapped BPI Capital Corp. as 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.