ALI eyes P15-B loans for record expansion

MANILA, Philippines - Ayala Land Inc. (ALI), the property arm of the country’s oldest conglomerate, plans to borrow as much as P15 billion to support its aggressive expansion program this year.

In an interview, ALI chief finance officer Jimmy Ysmael said the company is looking to finance 10 to 15 percent of its planned P100-billion capital expenditures program for 2015 through “incremental borrowings.”

“There will be some incremental borrowings, maybe not in the same magnitude as we have seen in the past. We want to maximize available cash,” he said.

Ysmael said ALI is initially looking to raise the amount within the first half of the year.

“Ideally, we’d like to do that just in time taking into account our reading of the interest rate market. But for now, we feel that within the next six months’ range will be quite reasonable so we just calibrate it as we need it,” Ysmael said.

“We don’t have any definite plans yet but as we have mentioned in the past, we would like to structure our long term borrowings to mirror the development cycle. Ideally seven, 10 (years) but that depends on the appetite of the market, but if not, five to seven. And we also want to manage the maturity so we don’t have very lumpy maturities moving forward,” he added.

ALI on Monday announced its biggest spending budget in the company’s history. This year’s P100 billion capex will already cover funding for new projects, expansion projects, and land acquisitions.

“We feel the current growth of the Philippine economy is sustainable. We’re confident to continue to expand, ramp up on our projects. As you know this is our record year for our capital expenditure. We will basically continue our investments not only this year but in the coming years,” ALI president and chief executive president Bernard Vincent O. Dy said.

To finance this year’s spending program, Dy said ALI will use a combination of cash flow generated from its operations as well as some debt financing.

ALI late last week was already able to raise P16 billion from a top-up placement of 484.849 million common shares at P33 apiece.

“Recent top up placement is part of our sources of funding. Of course we will still borrow a little bit more and draw on the cash flow from operations that we will generate within the year,” Ysmael said.

For the internally generated funds of about P75 billion to be spent this year, Ysmael said the amount would be sourced from a combination of “available cash, beginning cash, cash flow from operations, and dividends from subsidiaries.”

 “We still believe that the residential market will remain resilient. Certainly the interest rate is still conducive for continued mortgage lending and the underlying demand remains strong. High end, it will be a very selective market but we believe that it’s still a very good market anyway,” Ysmael said.