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Zobel-led Ayala Corporation, the country’s oldest conglomerate, is raising up to ₱31.5 billion through the issuance of preferred shares and Samurai loans from two Japanese banks to fund the expansion of its diversified businesses.
In a disclosure to the Philippine Stock Exchange, the firm said its board of directors has approved the issuance of Philippine Peso Preferred Shares worth up to ₱20 billion.
The planned issuance will have a base amount of ₱10 billion with an oversubscription option for up to an additional ₱10 billion, as endorsed by Ayala’s Finance Committee, subject to regulatory requirements.
In the same meeting, the Ayala board duly ratified the action of its Executive Committee approving the AC Samurai Loan with Mizuho Bank and Sumitomo Mitsui Banking Corporation of up to $200 million (equivalent) in Japanese Yen.
Ayala’s access to yen-denominated loans to fund growth initiatives at competitive rates has been enhanced after being assigned an inaugural Foreign Currency Long-Term Issuer Rating of “A-” by the Japan Credit Rating Agency, Ltd. (JCR).
According to the report released by JCR, the firm's group creditworthiness is considered to be equivalent to “A”, reflecting the strong business foundation in its four main segments of investment, the stability of its cash flow generation capabilities, the strength of its growth potential stemming from its business portfolio, and its relatively favorable financial balance.
However, JCR said it has assigned Foreign Currency long-term issuer Rating of “A-” with a Stable outlook to Ayala as it is constrained by the Philippines' sovereign rating.
A rating of “A-” indicates a relatively high level of creditworthiness and suggests that Ayala Corporation has a strong capacity to meet its financial commitments.
The rating enhances Ayala’s ability to tap credit and capital markets, broadening its investor base to include access to Samurai loans. Mizuho Bank acted as advisor for the company’s JCR rating.
“This is an affirmation of Ayala’s strong credit and further enhances funding sources amidst the current market volatilities,” said Ayala Treasurer Estelito C. Biacora.
He added that, “While high interest rates are anticipated to persist, cost of capital is expected to remain competitive. When we have widened access to capital, we are more able to build businesses that enable people to thrive.”
JCR said key points to be watched in the future are the impact of changes in factors such as interest rates, or trends of the real estate market or regulations on the ability to generate cash flow and its financial balance of the businesses in which Ayala invests, changes in its business portfolio stemming from changes in its investment policy and trends of its consolidated financial balance.
In particular, JCR plans to closely monitor how Ayala’s plans to expand its renewable energy power generation capacity in the power business will impact its financial position.
