Ayala Land (ALI) offers 5%, 10-year bonds



Most Filipino investors nowadays seem to be enamored with stocks as an investment option. This is not bad per se, but intelligent investors understand that a critical element of their overall investing strategy is portfolio diversification.

Diversification simply means investing in a variety of asset classes in order to reduce portfolio risk. Because asset classes have imperfectly correlated relationships, both in risk and return, investors gets to minimize their losses when they are diversified as compared to when they are not diversified.

We’ll discuss in more detail the value of and technical justification for portfolio diversification in another article. But to simplify things, diversification simply involves putting money not just in one asset class but in several asset classes in order to reduce overal portfolio risk.

Investment Options for Investors

Asset classes may be any of the following:

To learn more about each asset class, click on the links above to access articles which we have posted in the past.

As mentioned above, bonds provide an alternative option to stocks that investors may find worth investing in. Bonds, by definition, are debt securities representing obligations of one entity to pay another in a set future time. Unlike stocks, bonds have predetermined maturity periods and fixed interest rate.

Here is our section about Investing in Bonds if you want more details about this investment instrument.

ALI’s 5%, 10-year retail bonds

An example of bonds currently offered to investors are the 10-year retail bonds of property developer Ayala Land Inc. (ALI). These bonds mature in 10 years and pay a fixed annual interest of 5%. The 5% annual interest payment may be less than the capital appreciation provided by stocks, but certainly higher than rates offered by time deposits or even Special Deposit Accounts (SDA).

ALI issued P15 billion worth of retail bonds for the purpose of financing its capital expenditures. The public offer will run until 5 p.m. of July 25 while the issue and listing date for the bonds is set on July 30. Afterwards, these bonds may be traded and can be bought or sold in secondary markets.

Those interested to buy ALI bonds may approach their bank, specifically the Trust Department or Asset Management Division of the bank, to inquire about bond placement. Depending on the bank, minimum investment may vary from P100,000 to P1 million.

BPI Capital Corporation is the sole issue manager of ALI’s bond offering, with BDO Capital & Investment Corporation, China Bank, ING Bank and Standard Chartered Bank as joint lead underwriters and bookrunners. Deutsche Bank and First Metro Investment Corporation are co-lead underwriters.

Disclaimer

The content presented above are for information purposes only and are not intended as a solicitation to buy or sell the securities mentioned. They are also not meant to provide personal investment advice to readers of this article. PinoyMoneyTalk is not, in any way, related to the issuer of the securities or any of its underwriters.

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