Expanded trading of company bonds up

Taxable and tax-exempt institutions may soon trade corporate bonds, according to the Philippine Dealing System Holdings Corp. (PDS) Group.

“We are putting the rules in place. We’re still in early discussions [with regulators], but it was always part of the program to integrate taxable and non-taxable institutions,” Cesar B. Crisol, president and chief executive of the PDS Group, told reporters on the sidelines of the Second Asean Fixed Income Summit on Monday.

“This is one of our plans to make the market larger by integrating those sectors,” he said.

According to Crisol, PDS hoped to start the non-restricted trading of corporate bonds by the first quarter of next year.

As far as the Securities and Exchange Commission is concerned, Crisol said the regulator was “favorable to this undertaking.”

Market players, however, still have to secure the Bureau of Internal Revenue’s (BIR) go-ahead.

“We will have to clear this up with the BIR. We’ll have to get their approval,” Crisol explained.

In May, the Bureau of the Treasury rolled out the non-restricted trading and settlement environment for government securities, more than half a year after the Department of Finance announced the initiative.

In this environment, transfers between market participants are allowed regardless of tax status, hence allows tax-exempt institutions to trade in the debt market.

Meanwhile, Crisol said up to four companies would likely issue bonds during the fourth quarter.

He said these firms include conglomerates as well as players in the banking and services sectors.

These fourth quarter corporate bond issuances would bring to almost P100 billion by yearend their total value from P77 billion as of the end of the third quarter, Crisol disclosed.

The expected end-2015 amount would be just over half of the P191 billion worth of corporate bonds issued last year.

“As early as the first quarter, global volatility has put on hold many plans of issuers, whether debt or equity. Issuers took a step back to evaluate the situation,” he explained.

Crisol is more optimistic of prospects in 2016.

“If things are clearer by the end of the year, we’ll have a more aggressive market come next year,” Crisol said.