SEC easing shelf registration rules

The Securities and Exchange Commission (SEC) plans to make it easier and faster for bond issuers to come to the market by amending the rules on shelf registration.

Among others, the SEC plans to lengthen the shelf life beyond the current three-year window for tried-and-tested corporate issuers and offer greater leeway in using the shelf and pricing the securities.“We are looking at ways to further streamline and simplify the takedown/drawdown process by issuers from their shelf registration, thereby further shortening time to market,” SEC Commissioner Ephyro Luis Amatong said in an email to the Inquirer.Takedown refers to the price an underwriter pays for a new issue.

“We are also thinking of extending the effective period of a shelf registration for well-known seasoned issuers beyond the current three years,” he said.Under the shelf registration program, securities may be registered for an offering to be made on a continuous or delayed basis, or in tranches, for a period not exceeding three years. Capital raising can be done by issuers as they are needed and/or when market conditions are favorable.

The SEC provides flexibility in the payment of registration fees, which are payable per tranche of issuance and proportional to the issued value.

Amatong said the SEC was also awaiting proposals from the private sector, particularly from the Financial Executives Institute of the Philippines, on ways to enhance the shelf program. During the recent listing of Ayala Land’s P10-billion bond issuance, Amatong cited the importance of the debt capital market as a tool that supports the resilience and robustness of Philippines firms.

“While our banking system remains strong, thanks in large measure to the efforts of the Bangko Sentral ng Pilipinas, it cannot and should not be expected to be the sole source of credit in our financial system. That would neither be strategic nor wise,” he said.“In good economic times, a diversified financial sector provides the flexibility that a rapidly growing economy needs; in challenging economic times, funding diversity and flexibility are even more critical to help firms remain, at the least, resilient—able to bounce back when the worst of the crisis passes—and, we hope, robust —able to maintain their operations throughout a crisis,” he said.

Amatong said longer term, fixed-rate credit from a wide range of investors—which is what debt capital markets offer —would provide creditworthy firms the stable capital needed to operate through an economic crisis, and be well positioned for the recovery that would follow. INQ