PHILIPPINE property developer Ayala Land has recently priced a 10-billion-peso (US$191 million) bond offering with an innovative price structure that enabled the company to achieve a competitive cost of funding.

This was the first bond transaction that have a "true" re-pricing structure versus other instruments that have been issued in the domestic market, which have step-up features, such as preferred shares and tier 2 notes, according to a banker familiar with the deal.

The bonds have essentially a 10-year tenor, with the coupon for the first five years fixed at 5.9203% and priced off the five-year benchmark. The bonds are callable on year five at par, and at a premium on year seven at 102%, year eight at 101% and year nine at 100.50%

If the bonds are not called on year five, the coupon is re-priced for the next five years at 75bp over the interest rate repricing benchmark rate. The deal was initially announced with a spread of between 70bp and 100bp.

The pricing of the latest bond is comparable to recent Ayala Land issues, given the higher interest rate environment, the banker adds.

The public offer period for the bond issue was closed on April 20 and it was 1.5x oversubscribed, the banker says. The offer is capped at 10 billion pesos since for SEC-registered retail bond deal, the issue size is announced at the onset of the transaction. The offering was structured as a straight 10 billion pesos offer with no breakdown between the base size and greenshoe.

The deal was assigned a credit rating of Aaa by the Philippine Rating Services Corporation. It was part of the company's three-year debt securities programme (DSP) of up to 50 billion pesos. Ayala Land has already issued a total of 32 billion pesos in relations to its DSP.

Proceeds from the transaction will be used to partially finance Ayala Land's projects. BDO Capital and Investment Corporation, China Bank Capital Corporation and PNB Capital and Investment Corporation were the joint lead underwriters for the deal.

Ayala Land is one of the largest real estate conglomerates in the Philippines and is mainly involved in the development of large-scale, integrated mixed-use estates. It is highly diversified with projects for the high-end, middle income and affordable housing segments. It is also involved in office and shopping centre leasing, hotel operations, construction and property management.