Ayala Corporation today signed the underwriting agreement to issue a P10-billion fixed rate multiple put bond with a rate of 6.80%. Pricing 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%.
Ayala tapped BPI Capital Corporation as the issue coordinator for the deal. The joint underwriters are BDO Capital Corporation, BPI Capital Corporation, Citicorp Capital Philippines, Inc., First Metro Investment Corporation, Hong Kong and Shanghai Banking Corporation Limited, ING Bank, N.V., Manila Branch, RCBC Capital Corporation, and Standard Chartered Bank
Indicative demand for the bonds was strong, at an estimated P23 billion. The 10-year bond will mature in 2021, but will have multiple put options in 2016 and 2019.
Proceeds of the bond will be used to refinance the company’s P5.8-billion Preferred “B” shares whose call option was exercised by Ayala for payment on July 2011. The balance will be used to fund Ayala’s working capital requirements.
The bonds were Rated PRS Aaa by Philratings. The offer period for the bond is set for May 2 to May 6, with issue and listing date set for May 12.
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% partial put option on the fifth year and subsequently the 100% full put option on the eighth 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 to 1.25%, and with an option to hold on to the same rate up to 10 years.
“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 6.80%,” according to Ramon G. Opulencia, treasurer of Ayala Corporation.