Ayala increases bond

Strong retail demand prompts the conglomerate to increase its bond issue from $150 million to $200 million.

An additional $50 million line of paper was added to Ayala Corp's $150 million Reg S eurobond yesterday (Monday). The five-year deal was originally priced on Friday via lead manager JPMorgan and like SM Investments before it, attracted strong demand from Asian private banking clients.

This meant the overall book closed with a 65% allocation to private banks, followed by 30% to banks and only 5% to funds. Observers say that funds shied away from the deal because they found the pricing premium to the sovereign too aggressive, while retail clients were happy to pick up the deal because of the strong branding of the Ayala name.

Pricing came at a 15bp premium to the sovereign, whereas the deal had originally been pre-marketed at a 37bp level in line with past secondary market trading performance. However, the lead was able to maintain its indicative pricing at a yield of 8.25% despite the fact that sovereign spreads blew out over the course of the day.

Final pricing came at 99.496% on a coupon of 8.125% to yield 8.25% or 541bp over Treasuries and 501bp over Libor. By contrast, the sovereign's April 2008 bond was trading at a bid yield of 8.10%. The deal also came flat to Ayala's existing 2005 bond on a like-for-like basis, which was trading at 470bp over Libor.

.A total of 38 headline investors were said to have participated in the new deal, with a geographical split which saw 6% placed in Europe, 20% in the Philippines, 54% in Hong Kong and 20% in Singapore.

The best comparable is a $200 million Reg S bond for Sy family owned SM Investments, which came to market in early October via ABN AMRO, JPMorgan and Salomon Smith Barney. The group was able to take advantage of better credit sentiment for the Philippines and price the five-year deal with an 8% coupon, but at a much higher 80bp premium to the sovereign curve. Over half the book went to private banking clients and fees totalled 50bp against 40bp for Ayala's deal.