THE Securities and Exchange Commission (SEC) wants to overhaul public offering rules for debt securities via reforms aimed at making it easier for companies to raise funds while maintaining investor safeguards.
The regulator on June 23 released a draft memorandum circular amending the 2015 implementing rules and regulations of Republic Act 8799, or the Securities Regulation Code.
Among the proposed changes is the introduction of a medium-term note program, which will allow eligible companies to register a bond program once and issue multiple offerings over a period of up to five years.
Companies will only need to secure SEC approval for a primary disclosure document once.
Subsequent bond issuances can proceed through a shorter notice filing that outlines the specific terms of each offering, eliminating the need for a separate regulatory review every time a company returns to the market.
The SEC said the proposal would help issuers access capital more efficiently, respond more quickly to favorable market conditions and reduce the costs associated with repeated bond offerings.
SEC Chairman Francis Lim said the existing public offering framework has largely evolved around equity issuances, resulting in requirements that may not always fit the needs of debt issuers and bond investors.
“Over the years, our public offering framework has largely evolved around equity issuances. While this approach responded to the needs of the market at the time, certain requirements may not always be proportionate to the information needs of bond investors or the realities of debt fundraising,” he said.
“These reforms seek to establish a more fit-for-purpose framework for debt securities — one that reduces unnecessary frictions, promotes market efficiency and enables more companies to tap the public bond market as a source of long-term funding.”
The proposed rules will also establish a disclosure framework specifically designed for bond investors.
For debt-only issuers, disclosures will focus on information relevant to creditors, including an issuer’s creditworthiness and capacity to service debt obligations rather than the broader requirements typically applied to equity offerings.
The SEC is likewise proposing a more proportionate disclosure regime for qualified medium-sized enterprises.
Eligible debt-only issuers will be allowed to use standardized disclosure templates, submit fewer years of financial statements and comply with suggested limits on document length.
The SEC said these would lower compliance costs and reduce administrative burdens that could discourage growing companies from accessing the capital markets.
The draft circular also proposes modernizing registration procedures by allowing required notices to be published online instead of in newspapers and clarifying disclosure update requirements during offering periods.
The SEC described the package as one of the most significant updates to the public offering framework for debt securities in recent years.
The regulator said it would accept public comments on the proposed rules until July 9.
