These days, being a responsible borrower isn’t enough; businesses must also actively contribute to environmental sustainability.
As such, the Zobel family's Ayala Land is finalizing a P14 billion sustainability-linked loan from the World Bank’s International Finance Corp. (IFC) as the sole lender.
The developer will need to repay the debt in about eight years while committing to cut building emissions and improving efficiency across its offices, facing higher interest rates if key performance indicators are not met.
Landmark loan deal
Ayala Land is the real estate arm of the country’s oldest conglomerate, Ayala Corp.. It aims to finalize the IFC loan terms in the next 24-48 hours, Ayala Land chief finance officer Augusto D. Bengzon told reporters on Thursday.
“We’re borrowing money for our developments, which are sustainable developments. Transport hubs, making the [business districts] more walkable, incorporating green features in our developments,” Bengzon said.
“Sustainability is already embedded in our business model,” he added.
Big picture
Ayala Land is tapping into interest from banks and financial institutions to bankroll sustainable programs.
The builder is looking to accelerate expansion given its target to double profits to nearly ₱50 billion by 2028.
Strict commitments
The debt parameters include pledges by Ayala Land to cut mall, office, and hotel emissions by 42 percent in 2030 and achieve the stringent EDGE Zero Carbon certification for 1.5 million square meters of office space by next year.
The builder’s failure to do so will raise interest payments on the loan by 0.05 percent every year, said Jose Eduardo A. Quimpo II, Ayala Land vice president and treasurer.
Funding requirements
On Thursday, Ayala Land completed the listing of P6 billion worth of ASEAN sustainability-linked bonds due in 2034.
“It was three times oversubscribed so they were actually able to generate quite a bit of demand,” Bengzon said.
The deal was supported by six banks: BDO Capital & Investment Corp., BPI Capital Corp., China Bank Capital Corp., Land Bank of the Philippines, RCBC Capital Corp., and SB Capital Investment Corp.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
