Real estate giant Ayala Land Inc. (ALI) has successfully raised P20.5 billion through its pioneering Sustainability-Linked Financing (SLF) Program after securing a loan from the International Finance Corporation (IFC).
In a statement, the Zobel-led firm said the funding package includes a P6 billion Sustainability-Linked Bond (SL-Bond) and a P14.5 billion Sustainability-Linked Loan (SL-Loan) from the IFC.
This initiative marks a first for the Philippine real estate sector, adhering to international guidelines and independently verified by Det Norske Veritas.
ALI President and Chief Executive Anna Ma. Margarita B. Dy said "this landmark investment drives our efforts in portfolio decarbonization, reinforcing our commitment to a greener property sector in the Philippines."
The SLF Program aligns ALI's financial commitments with its environmental targets.
The interest rates of the SL-Bond and SL-Loan are linked to ALI’s performance on key sustainability metrics, including a 42 percent reduction in emissions from malls, offices, and hotels by 2030 and achieving EDGE Zero Carbon certification for 1.5 million square meters of office properties by 2025.
Failure to meet these targets will result in a 5-basis point increase in interest rates for each unmet target, up to 10 basis points.
The P14.5 billion SL-Loan, provided by IFC, is ALI's first loan from a multilateral agency and IFC's first sustainability-linked loan for a Philippine corporation.
The loan will be drawn in up to four disbursements and supports ALI’s decarbonization efforts and green building initiatives.
IFC Country Manager for the Philippines Jean-Marc Arbogast said "Ayala Land is a leader in sustainability in the Philippine property sector. We are proud to support this landmark investment, which we hope will inspire other industry players to join the green building movement."
Meanwhile, the P6 billion SL-Bond, with a 10-year term, is the first of its kind offered to the public in the Philippines.
Despite its innovative structure, the bond attracted substantial demand, reaching P18.2 billion and clearing at 30 basis points over the BVAL rate.
The bond, anchored by pension funds and institutional investors, carries a coupon rate of 6.9931 percent per annum.
"In keeping its ESG-focused mentality, we understand that this is also the first fully paperless issuance by a Philippine corporation, and kudos to ALI, again, for saving more trees and showing the digital way forward," said Philippine Dealing & Exchange Corp. (PDEX) President and CEO Antonio Nakpil.
Securities and Exchange Commission Commissioner McJill Bryant Fernandez said “this move strongly demonstrates your commitment to create long-term economic, environmental, and social value for your stakeholders.
“This milestone is not only a significant achievement for the company, but more importantly, for the country as it represents charting new paths for sustainable finance in the Philippines," he added.
This funding will enable ALI to implement energy and water-saving measures across its commercial real estate portfolio, including energy-efficient lighting and cooling systems, passive building design, low-flow water fixtures, and water harvesting and recycling systems.
Ayala Land's SLF Framework is aligned with international standards, including the ASEAN Sustainability-Linked Bond Standards (ASEAN SLBS), the Sustainability Linked Bond Principles (SLBP) issued by the International Capital Market Association (ICMA), and the Sustainability Linked Loan Principles (SLLP) issued by the Asia-Pacific Loan Market Association (APLMA).
ALI Chief Finance Officer Augusto D. Bengzon said this ambitious SLF Program not only cements ALI’s position as a sustainability leader in the real estate sector but also sets a precedent for future green financing initiatives in the Philippines.