Conglomerate Ayala Corp. is raising $400 million from the issuance of dollar-denominated perpetual bonds with a fixed coupon of 4.850 percent yearly.
AC said in a disclosure to the stock exchange the bonds would be issued by wholly-owned subsidiary AYC Finance Ltd. and unconditionally and irrevocably guaranteed by AC.
The issue marks AC’s return to the international bond market after a perpetual fixed-for-life bonds in 2017.
“The successful fixed for life issuance will further support our thrust for sustainable growth and enable Ayala Corporation to diversify our liquidity sources and strengthen our balance sheet. We are very pleased with the strong investor receptivity and continued support” said AC chairman and chief executive Jaime Augusto Zobel de Ayala.
The company will use the net proceeds from the bond sale to refinance maturing dollar-denominated obligations and fund investments of the guarantor or offshore subsidiaries.
“We are grateful for the unwavering support from the investors despite volatile market conditions. This issuance will provide us with additional flexibility to lengthen our maturity profile and support our strategic initiatives,” said AC chief finance officer Jose Teodoro Limcaoco.
“The bonds were priced at par with a re-offer yield of 4.850 percent, reflecting a 27.5 basis points compression from the initial price guidance,” the conglomerate said.
The final order book was over four times over-subscribed in Asia and Europe, reflecting the strong investors’ confidence in the Ayala name.
By investor type, more than half of the offering was allocated to fund managers, insurance companies and pension funds, around one-quarter to banks and financial institutions and the remainder to private banks. The transaction is expected to settle on October 30, 2019.
AC is the second issuer in Asia Pacific to price a fixed-for life perpetual in 2019 year-to-date. The bonds are also lowest yielding fixed-for-life perpetual ever out of South East Asia.
AC is one of the largest conglomerates in the Philippines with businesses in real estate, financial services, telecommunications, water, power, industrial technologies, infrastructure, healthcare, education and technology ventures.
It units include Ayala Land Inc., Bank of the Philippine Islands, Globe Telecom Inc., Manila Water Company Inc., Integrated Micro-Electronics Inc. and AC Energy Inc.