ING Bank sees more robust Philippines capital market

MANILA, Philippines - Dutch financial institution ING Bank sees a more robust capital market in the Philippines after the Securities and Exchange Commission (SEC) issued the guidelines on the issuance of commercial papers.

Consuelo Garcia, country manager of ING Bank in Manila, said in a statement the implementing rules and regulations (IRR) of the Securities Regulation Code (SRC) easing the rules on the issuance of debt papers is out. 

The bank said the new amendments would entice more companies to raise funds in the domestic market, plug regulatory gaps, strengthen market and regulatory structures, and encourage global best practices.

“The relaxation of the rules on commercial paper issuance, in particular, will widen the availability of instruments in the market and deepen the capital markets,” Garcia said. 

Garcia chairs the Capital Markets Committee of the Bankers Association of the Philippines.

She said the committee worked closely with the SEC and other industry organizations in coming up with amendments to the IRR that would be more responsive to current market conditions.

She added the streamlining of the process for the issuance of commercial papers and corporate notes is expected to encourage more corporate issuers to raise funding from the capital markets instead of the bank market.

Early this month, the SEC approved the new guidelines to enhancing the existing requirements including the ability of companies to raise funds in the domestic market.

SEC chairperson Teresita Herbosa earlier said the new guidelines address regulatory gaps, strengthen market and regulatory structures, and adopt global best practices to make sure that the players are able to meet the challenges posed by increasing market sophistication and regional integration.

Under a shelf-registration program, securities to be issued in tranches may be registered for an offering to be made on a continuous or delayed basis for a period not exceeding three years.

The new rules also define commercial paper as evidence of indebtedness of any person with a maturity of 365 days or less. The terms of long-term commercial paper and short-term commercial paper were scrapped under the new guidelines.

The rules also exempt public offerings including employee stock-option plans issued by a corporation to its eligible employees from registration.

Furthermore, the new guidelines state underwriters are no longer required to underwrite securities solely on a firm commitment basis but could agree on a different plan of distribution with the issuing company subject to approval by the SEC.

However, the rules provide that issuers of registered securities, except issuers of proprietary/non-proprietary membership certificates or shares should enter into an underwriting agreement with an investment bank or investment house.