The Ayala Corporation is one of the few blue chips based in the Philippines. And its importance is such that Filipinos view the family owners as the country’s first family. So while the company is an infrequent borrower – in sharp contrast to the higher-rated sovereign – when it does come to the market it is able to grab many investors’ attention. And again unlike the sovereign it gets it for the right reasons. The corporate is held in such high regard that many believe that its credit rating would in fact be a lot higher than the sovereign’s if it wasn’t actually based in the Philippines. Marc Jones, head of debt at JPMorgan says: “What Ayala does well is capitalize on its position. It knows its strengths are its brand and being one of the country’s few blue chips. It means that it has an investor base supportive of the name and so makes a strong alternative to the sovereign.”
In February, Ayala decided to come to the market at around the same time as the sovereign. And while the sovereign was forced to downsize its euro offering to e300 million, Ayala was able to increase its $150 million, five-year deal by $50 million. It clearly proved the point that whenever Ayala decides to do a transaction it always manages to attract the demand. The pricing of the deal was seen as quite aggressive. This put off many funds in the region buying into it, but with such a famous name the retail investor demand offset any slack. The corporation also managed to get 6% of its paper into Europe, a region where comfort with Philippine names is still some way off.
Another part of Ayala’s strategy that deserves recognition is its realization that many of the domestic banks in the Philippines were jaded with the amount of sovereign paper being thrown at them. By coming when it did it offered the banks a viable alternative to yet another government bond deal. Banks in the country had been pulling back from sovereign deals over the previous few months. With the Ayala transaction there was no such troubles: about 40 investors across Asia were tempted. A banker says: “Given the dearth of corporate supply, its timing was excellent, so it was always going to be a success.”
