Board for dollar-denominated securities eyed

The Philippine Stock Exchange plans to introduce a dollar-denominated securities (DDS) board to allow local issuers to harness foreign exchange inflows into the country.

The proposed DDS board seeks to provide issuers the flexibility to meet their capitalization requirements.

“It’s not an IPO (initial public offering). These are listed names already (which are) looking for a separate asset class for funding,” PSE president Hans Sicat said in a press briefing late Monday, “It could be very exciting actually.”

The DDS is seen suitable for large companies with dual listing overseas, like Philippine Long Distance Telephone Co., which has depositary receipts traded in New York, or Del Monte Pacific, which is also listed on the Singapore Exchange. US dollar-denominated preferred shares can also be listed on the proposed DDS trading facility.

For investors, DDS is seen to provide an alternative investment instrument, especially for those with US dollar deposits.

The plan to introduce a DDS facility comes at a time when the US dollar is seen to be on a structural uptrend, given the recovery in the US economy that has given the US Federal Reserve sufficient confidence to start raising interest rates.

Based on a briefing paper from PSE, its board had already agreed to circulate the framework for DDS for public comments.