Ayala Land Inc. is raising P55 billion through a sustainability-linked bond issue to refinance debt and partly fund its capital expenditure program this year, the property company said.
An estimated 60 percent or P33 billion will be raised through sustainability-linked financing, Augusto Bengzon, Ayala Land chief finance officer, said during a briefing after Ayala Land’s shareholders’ meeting Thursday.
“So of the P55 billion, 60 percent of that will be through our sustainability-linked financing program and 40 percent will be with our relationship banks through our bilateral credit facilities,” Bengzon said.
The International Finance Corp., a member of the World Bank Group, defines sustainability-linked finance as an incentive scheme through pricing incentives linked to a borrower’s achievement of environmental, social, or governance targets.
Bengzon said the financing scheme has paved the way for Ayala Land to tap into a cheaper credit spread compared with a typical bond float, noting that it reinforces the company’s “desire to push on with sustainability initiatives” like reducing carbon emissions by 42 percent from a 2021 baseline by 2030.
Ayala Land will use P25 billion from the proceeds of its bond sale to refinance maturing obligations, with the balance to partly fund the company’s P95-billion capital expenditure for the year.
“Going back to the 60 percent which will be under our sustainability-linked financing program, about 50 percent of that will be with a multilateral agency and the other 50 percent will be through the capital market. So it will be a sustainability-linked bond which we will list on the fixed income market,” he added.
Ayala Land Chairman Jaime Augusto Zobel de Ayala told shareholders that sustainability-linked financing will be the “standard” for the company’s future fund-raising plans.
Anna Margarita Dy, Ayala Land president, reiterated the company’s plan to grow twice the gross domestic product (GDP) growth.
“So, if GDP is to grow at 6 percent, our target is to grow at 12 percent,” Dy said, as she doubled down the company’s focus on the affluent side of the residential segment of real estate to tide the current tough environment, particularly given the trade war initiated by US President Donald Trump with America’s biggest trading partners.
Ayala Land is uncertain as to what extent the US trade war will impact its businesses, considering 60 percent of its overseas sales are from the US.
“Of our sales, 13 percent is external. It is what we call international. Those are mostly OFWs or Filipinos abroad, whatever their circumstances are. And the biggest market of the 13 percent is actually still the US,” Dy said.
Mike Jugo, Ayala Land Premier president, confirmed the bulk or 7.8 percent of their luxury properties are sold to US-based buyers.
“Our focus on the premium segment will continue. So, specifically the premium segment and more horizontal developments,” Dy said.
In February, Ayala Land revealed plans to launch P100-billion worth of developments this year, of which P80 billion consists of residential properties and P20 billion of commercial and industrial lots.
The real estate arm of Ayala Corp. also plans to open and acquire more than 170,000 square meters of leasing assets in its malls, offices and logistics centers.
