In our last blog, we shared the major differences of different investments like equities, bonds, stock market and mutualfund.
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Now here’s real-world news from Inquirer Business about offering of bonds:
Conglomerate Ayala Corp. launched on Friday its public offering of 15-year bonds that were priced to yield 6.875 percent a year.It is the first corporate bond issue of this tenor in the domestic capital market.Ayala hopes to raise P10 billion from the bond offering, which will fall due in 2027, as it seeks opportunities for expansion through both organic growth and value-enhancing acquisitions, including infrastructure concerns.“We always ensure that we maintain a highly flexible funding position at the holding company level that will allow us to invest in sizable projects without impeding other value-enhancing initiatives we are currently undertaking,” Ayala treasurer Ramon Opulencia said in a statement.“The low-interest rate environment and the robust liquidity in the system provide an ideal environment for us to be able to stretch our tenors and match the anticipated long gestation period of the investments that Ayala envisions,” he added.The bonds are being offered to the public through underwriters BPI Capital Corp., BDO Capital & Investment Corp., First Metro Investment Corp., HSBC, ING Bank Manila, RCBC Capital Corp., SB Capital Investment Corp., and Standard Chartered Bank.The bonds will be listed on local fixed income exchange Philippine Dealing and Exchange System on May 11.Ayala has been putting more chips into new growth areas like infrastructure and power generation. Late last year, the conglomerate won the bid for the Daang Hari connector toll road under the government’s public private partnership program.—
Below are the terms and conditions of the Bonds:
Issuer : Ayala Corporation (AC)
Offer : Fixed Rate Callable Bonds
Issue Size : PhP 10 billion
Tenor : 15 years
Call Option Exercise : Starting 10th year and every year thereafter up to the 14th year until exercised
Interest Rate : 6.875%
Coupon Payment : Quarterly
Taxation : Interest income is subject to 20% final withholding tax. All sums payable to tax-exempt institutions (TEIs) shall be paid in full.
Maturity Date : May 11, 2027
Minimum Investment : P50,000.00, and in multiples of P10,000.00 thereafter
Bond Rating : PRS Aaa
Form : Scripless. Investor will receive a Registry Confirmation as proof of investment.
Timetable : Public Offering - April 30 to May 7, 2012
Issue date - May 11, 2012
Also, below are additional insights from Sir Aya Laraya regarding this Ayala bond offer:
You don't "withdraw" bonds; you sell them if you want the principal earlier than maturity. If there is a willing buyer and the price is good for you, then you can sell your bonds. Medyo mahirap lang magbenta kasi mahirap mag-presyo at maghanap ng buyer. Usually, the only buyer is the bank or investment house who sold it to you so its hard to get true market rates.Also, since these are "Callable" bonds, this means that, beginning on the 10th year, if AC can re-finance at lower rates, they can "force" you to sell the bonds back to them -- normally at face value.
For more details, you may visit your nearest BPI branch.
Have fun and millions investing!
PS1: If you’re a beginner investing in the Philippine Stock Market, download your investing book here – Investing in the Philippine Stock Market for Beginners! If not, share it to your beginner friends!