RATING NEWS

16 January 2017
The Pioneer Domestic Credit Rating Agency
Ayala Corporations Second P10 Billion Issuance
in its Fixed-Rate Bonds Program Rated PRS Aaa
An Issue Credit Rating of PRS Aaa, with a Stable Outlook, was assigned by Philippine Rating Services
Corporation (PhilRatings) for Ayala Corporations (Ayala) proposed P10 billion Retail Bonds. The
proceeds of the issuance will be used to refinance Ayalas outstanding PRS-rated bond issuance of P10
billion maturing on April 30, 2017.
This will be the second and last issuance of the company in relation to its three-year Fixed Rate Bonds
Program (FBP) of up to P20 billion. Last July 2016, Ayala initially issued P10 billion in Retail Bonds due
on July 7, 2023 for its FBP. These were similarly assigned an Issue Credit Rating of PRS Aaa, with a
Stable Outlook, by PhilRatings.
The following Issue Credit Ratings of PRS Aaa, with a Stable Outlook, were maintained by PhilRatings
for the following other outstanding Retail Bonds of Ayala: a) P10 Billion Retail Bonds due on April 30,
2017; b) P10 Billion Retail Bonds due on May 12, 2021 and c) P10 Billion Retail Bonds due on May 11,
2027.
PRS Aaa is the highest credit rating assigned by PhilRatings. Obligations rated PRS Aaa are of the
highest quality with minimal credit risk. The obligors capacity to meet its financial commitment on the
obligation is extremely strong.
On the other hand, an Outlook is an indication as to the possible direction of any rating change within a
one year period, and serves as a further refinement to the assigned credit rating for the guidance of
investors, regulators, and the general public. A Stable Outlook is defined as: The rating is likely to be
maintained or to remain unchanged in the next 12 months.
The following key factors were considered in the assignment of the ratings for Ayalas bonds: a) Ayalas
strong brand equity and leading market position for its core businesses; b) well-defined strategy, backed
by a strong management team with a solid track record; c) sustained profitability; and d) healthy cash
flows and financial flexibility.
PhilRatings ratings are based on available information and projections at the time that the rating review
was performed. PhilRatings shall continuously monitor developments relating to Ayala and may change
the ratings at any time, should circumstances warrant a change.
Ayala is one of the largest and most diversified conglomerates in the Philippines. Founded in 1834, Ayala
has maintained dominant positions in various industries in the country. Ayalas portfolio includes: Ayala
Land, Inc. (ALI), Bank of the Philippine Islands (BPI), Globe Telecom (Globe) and Manila Water
Corporation (Manila Water). Ayala also has interests in industrial technologies, power generation,
transport infrastructure, international real estate, healthcare, and education. Ayala, in recent years, has
taken on an aggressive growth strategy across its businesses to capitalize on a vibrant domestic economy.
Ayala booked P32.48 billion in net income in the first nine months of 2016, an 11.2% increase from the
P29.21 billion recorded in the same period last year. This was backed by the sustained growth of its major

operating subsidiaries, such as ALI and BPI. Net income margin remained healthy at 19.6%. It also
maintained a significant amount of cash at P74.43 billion and a current ratio of 1.25x. Furthermore, Ayala
retained a healthy cash flow in relation to its interest servicing requirements with earnings before interest,
taxes, depreciation and amortization (EBITDA) interest cover at 4.5x. Ayala continued to be
conservatively capitalized with DE ratio at 0.82x and solvency ratio at 1.7x.
Following the attainment of its five-year plan of growing net income to P20 billion and return on equity
(ROE) to 15%, Ayala is committed to increase its earnings capacity to P50 billion and to sustain an ROE
of 15% over the next five years. Ayalas major business units will continue to drive earnings going
forward. It is likewise the companys intention, though, to diversify and expand its portfolio. Such will be
achieved by pursuing opportunities in the energy sector, establishing an increasing presence in Southeast
Asia, and exploring further new sectors like healthcare and education.
It should also be noted that Ayala exercised its Call Option for and fully paid its PRS-rated P10 billion
Retail Bonds due on Nov. 23, 2019. The aforementioned bonds were rated PRS Aaa with a Stable
Outlook, when its Call Option was exercised by Ayala.