Ayala Land Completes P20.5 Billion in Sustainability-Linked Funding

July 20, 2024, Makati, Philippines — Ayala Land Inc. (ALI) has successfully raised ₱20.5 billion through its pioneering Sustainability-Linked Financing (SLF) Program. The funding package includes a ₱6 billion Sustainability-Linked Bond (SL-Bond) and a ₱14.5 billion Sustainability-Linked Loan (SL-Loan) from the International Finance Corporation (IFC). This initiative marks a first for the Philippine real estate sector, adhering to international guidelines and independently verified by Det Norske Veritas.

Meean Dy, President and CEO of ALI, highlighted the importance of this milestone, saying, "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% 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 a total of 10 basis points.The Sustainability-Linked Bond Tranche

The ₱6 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 ₱18.2 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% 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 Antonio Nakpil, President and CEO, Philippine Dealing & Exchange Corp. (PDEX).The initiative pursued by ALI has been commended by the Securities and Exchange Commission (SEC). "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," said SEC Commissioner McJill Bryant Fernandez.

The Sustainability-Linked Loan Tranche

The ₱14.5 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 corporate. The loan, which will be drawn in up to four disbursements, supports ALI’s decarbonization efforts and green building initiatives.Jean-Marc Arbogast, IFC Country Manager for the Philippines, commended ALI’s sustainability leadership, stating, "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."

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.

A Pioneering Approach

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).

In his remarks at the bond listing, ALI’s CFO, Augusto D. Bengzon, reflected on the company’s sustainability journey, stating, "In 2007, Ayala Land formalized sustainability as a guiding principle in land use and development. A year after in 2008, Ayala Land issued the first listed bond in the Philippine Dealing & Exchange Corp. As we look back, we cannot help but feel a sense of awe how these two seemingly unrelated events have now intertwined as we come together this morning to list ALI’s P6 billion 10-year issue as the Philippine capital market’s first ASEAN Sustainability-Linked Bond.”

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.

Management Committee Members and Executives of Ayala Land, Inc., Securities and Exchange Commission, Philippine Dealing & Exchange Corp., Philippine Depository & Trust Corp., and Joint Lead Underwriters and Bookrunners (BDO Capital, BPI Capital, China Bank Capital, LANDBANK, SB Capital and RCBC Capital) at the listing of the P6 billion Sustainability-Linked Bonds last July 18, 2024.