Ayala Land mulls peso-denominated ‘green’ bonds

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By Arra B. Francia, Senior Reporter

AYALA LAND, Inc. (ALI) is looking at the issuance of peso-denominated “green” bonds in the future, following the recent release of guidelines for such a product by the Securities and Exchange Commission (SEC).

“We’ve been in discussions with various institutions for a green bond for Ayala Land. Our consideration is if it should be in the local currency,” ALI Chief Finance Officer Augusto Cesar D. Bengzon told reporters after the listing ceremony for its P8-billion fixed rate bonds in Makati on Monday.

Green bonds are those whose proceeds will be used exclusively for existing eligible green projects, including renewable energy, energy efficiency, pollution prevention and control, environmentally sustainable management of living natural resources and land use, clean transportation, climate change adaptation, and green buildings.

The SEC released the guidelines for the issuance of green bonds in September last year. Only Yuchengo-led lender Rizal Commercial Banking Corp. has issued green bonds, raising P15 billion last February to support environmental and climate projects.

Mr. Bengzon said the company has been entertaining proposals from potential underwriters for more than five years now, although noting that not a lot of institutions are willing to underwrite a local currency green bond.

“If we receive good terms for a green bond, we certainly would consider issuing one of those instruments… We just have to come to terms with a green bond that is responsive to the needs of Ayala Land and at the same time one that qualifies as a true green bond,” the ALI executive said.

Mr. Bengson noted clarifications will be needed on the accreditation requirements for a bond to be considered green. While sorting out these requirements, he said ALI is already embarking on a company-wide sustainability initiative that will prepare it for such an issuance.

ALI has committed to neutralize its carbon footprint by 2022. To offset the projected 490,000 tons of carbon emissions from its commercial properties, the company is dedicating 450 hectares of its landbank to carbon forests, implementing passive cooling design in its developments, and shifting to renewable energy.

The property developer is also preparing its first real estate investment trust, where it plans to raise about $500 million through the registration of its prime office assets in Makati within the year.

In the meantime, Mr. Bengzon said ALI has now fully covered its funding requirements for the year after the issuance of P8-billion seven-year bonds from its P50-billion shelf on Monday. The bonds were listed at the Philippine Dealing and Exchange Corp.

“Before we did the bond, we closed up two bilateral loans and if I’m not mistaken, the team has another two bilateral loans that they will execute in the next two months. Our funding requirements for the year will be close to P40 billion — P20 billion for refinancing, P20 billion to fund our projects,” Mr. Bengzon explained.