Real estate giant Ayala Land Inc. is raising ₱15 billion from its third Sustainability-linked Bonds as part of plans to raise up to ₱55 billion in funding before the end of the year.

Philippine Rating Services Corporation (PhilRatings) said it has assigned the highest Issue Credit Rating of PRS Aaa, with a Stable Outlook, to ALI’s proposed third Sustainability-linked Bonds amounting to ₱10.0 billion, with an oversubscription option of up to ₱5.0 billion.

PhilRatings said it also maintained its Issue Credit Rating of PRS Aaa, with a Stable Outlook, for Ayala Land’s ₱104.25 billion outstanding bonds.

Obligations rated PRS Aaa are of the highest quality with minimal credit risk. The obligor’s capacity to meet its financial commitment on the obligation is extremely strong.

On the other hand, a Stable Outlook indicates that the assigned rating is likely to be maintained in the next 12 months.

At arriving at its credit rating and outlook for ALI’s issuance, PhilRatings said it considered the firm’s well-diversified portfolio, complemented by strong brand equity, as well as its solid portfolio expansion strategies, backed by its experienced management team and synergies with parent company Ayala Corporation.

Also factored in is ALI’s sustained commitment to sustainability, robust earnings and healthy cash flows driven by the positive performance of its real estate and leasing portfolio, and its conservative capital structure.

Former ALI Chief Finance Officer Augusto Bengzon said earlier that the firm will be raising ₱10 billion this month from a multilateral sustainability-linked loan.

In an interview, that ₱30 billion or 60 percent of the ₱50 billion to ₱55 billion funding will be sustainability-linked format so they are also slating the issuance of green bonds by October aside from bilateral loans within the fourth quarter.

He said earlier that they are scheduling their term funding program later as interest rates are expected to go down in the next few months.

“We think [interest rates have] started to come down a bit, especially on the long end. Hopefully we’ll see another rate cut [on August 28] and then maybe one more towards the latter part of the year,” Bengzon said.

He said they are favoring the sustainability-linked financing format since this “has been well-received by the public and has received many awards across the region for its innovative nature.”

In terms of funding sources, he said 40 percent would be raised from the capital markets, another 40 percent through bilateral facilities with banks and the remaining 20 percent with a multilateral agency.

ALI is raising funds to pay for maturing debt as well as to finance capital expenditures amounting to ₱95 billion which is intended to increase its net income at double the growth rate of the Philippines' gross domestic product (GDP).

This year's capex, 12 percent higher than the ₱85 billion earmarked last year, will fund the expansion of ALI's residential, estate, leasing, and hospitality businesses.

Of the ₱95 billion capex, 37 percent will be allocated for its residential business development, 25 percent earmarked for estate development, 23 percent allotted for leasing and hospitality ventures, while the remaining 15 percent will be set aside for land acquisitions and general corporate purposes.

ALI will be launching projects worth ₱100 billion, consisting of residential, commercial, and industrial properties for sale; as well as expanding its leasing assets by 170,000 square meters (sqm), of which 78,000 sqm will be in malls, 50,000 sqm are office spaces, and 44,000 sqm of logistics facilities.