Listed real estate conglomerate Ayala Land Inc (PSE: ALI) recently disclosed in its 1Q 2020 financial report that its net income decreased by 41% vs 1Q 2019 (from P7.3-billion to P4.3-biliion), citing numerous factors as cause for decline, mostly events out of its control: initial impact of COVID-19 ECQ, Taal eruption, Davao earthquake etc. These drove down revenues from ALI’s malls and sales for its real estate developments.
It also mentioned waiving P2.6-billion of worth of rent from their 32 malls nationwide. Imagine that. For some universal banks, P2.6-billion is already a quarterly net income. For the ALI giant, it’s just rental from its malls. From the planned P110-billion capital expenditures (capex) for 2020, expected warchest to grow the real-estate empire has been lowered to P69.8-billion. We all know that ALI and the major companies in the Ayala Group (PSE: AC) were good corporate citizens, extending resources and providing helping hands to the government and to Filipinos to cushion the impact of COVID-19.
To help the company in its cash flow and financing needs (given the challenges from revenue side), ALI also mentioned that it still plans to pursue its Real Estate Investment Trust (REIT), as well as utilize its shelf-registered bonds. And speaking of the bonds, here’s what we know so far for 2020.
ALI Bonds 2020
Here’s what we have so far on the planned Ayala Land Bond Offering. Note that details here are still being finalized, but so far this is what BPI Capital sent us.
- Issue Amount: Up to 6-billion
- Bond Rating: To be determined by Phil Rating Services Corp
- Indicative Rates: 3.30% to 3.60% p.a. (to be finalized by June 9, 2020)
- Tenor: 2 years
- Offer Period: June 11 to 19, 2020
- Tentative Issue and Listing Date: June 26,2020
- Underwriters and Bookrunners: BDO Capital, BPI Capital, China Bank Capital (so once this is official, you may inquire from their affiliate banks PSE: BDO, PSE: BPI and PSE: CHIB respectively)
Caveat from BPI Capital. This communication is not a solicitation and offer to buy or sell. Not yet. A registration statement for said bonds has already been submitted to SEC but is not yet effective, so until it becomes effective, these bonds may not yet be offered by underwriters and be sold to investors. So don’t inquire yet from these banks ok?
For now, if you find the indicative rates attractive enough, you might want to start pooling your funds as tentative offer period is less than a month away. The initial communication did not say the minimum investment amount though, but from previous bond offerings of other issuers, the minimum investment is usually P50K if via BPI. If via China Bank usually it’s higher (~P200k minimum previously).
Will update this once we get more details.
What are Bonds Anyway?
Watch the following video to know more about bonds.
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Images from Ayala Land website.