SEC approves 1st corporate debt vehicle

MANILA, Philippines — The Securities and Exchange Commission (SEC) has approved the country’s first corporate debt vehicle or CDV.

A CDV is a closed-end investment company that issues securities consisting of either shares of stock or units of participation in such CDV to any number of qualified and non-qualified buyers not exceeding 19 persons in the Philippines during any 12-month period.

The objective is to invest in the corporate debts of large corporations and medium-sized enterprises.

In its meeting on Oct. 6, the SEC en banc approved the application of ATRAM Unitized Corporate Debt Vehicle Inc. to act and operate as a closed-end investment company.

The SEC also confirmed ATRAM’s offering of 50 billion units of participation as an exempt transaction. CDVs are exempt from registration requirements prescribed by Republic Act 8799 or the Securities Regulation Code, but subject to the confirmation by the SEC.

The confirmation of exemption from registration covers the offering of ATRAM Unitized CDV’s first unit class, ATRAM Unitized Corporate Debt Fund 1 (ACDF-1), comprising up to one billion units of participation at the offer price of P1 per unit.

“ACDF-1 shall be primarily offered to qualified buyers under private placements within six months from the commencement date, with a term of two years from the issue date and for a minimum initial investment of P1 million,” the SEC said.

ATR Asset Management shall serve as the company’s fund manager, principal distributor, transfer agent and service provider.

Incorporated in 2021, ATRAM was the first investment company to apply as a CDV under the rules on CDVs issued through SEC memorandum circular No. 23, Series of 2020. The new investment vehicle is intended to support the liquidity needs of large and medium-sized corporations in the aftermath of the COVID-19 pandemic.

The SEC’s approval marks the introduction of such an investment product in the country’s capital market.

SyCip Salazar Hernandez & Gatmaitan welcomed the SEC’s CDV framework, saying it provides additional funding options to large and medium enterprises during these difficult times.

Proceeds from the issuance of CDV securities shall be invested in bonds, notes, commercial papers, debentures and other evidence of indebtedness, whether secured or unsecured, of large corporations and medium-sized enterprises operating or deriving income in the Philippines.