SEC approves country’s first corporate debt vehicle

The Securities and Exchange Commission (SEC) has authorized ATRAM Unitized Corporate Debt Vehicle, Inc. to act and operate as a corporate debt vehicle (CDV), marking the introduction of such an investment product into the Philippine capital market.

In its meeting on October 6, the Commission En Banc approved the company’s application to act and operate as a closed-end investment company, and confirmed its offering of 50 billion units of participation as an exempt transaction, subject to its compliance with certain remaining requirements.

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.

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

Incorporated in 2021, ATRAM Unitized Corporate Debt Vehicle, Inc. 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.

A CDV is a closed-end investment company that issues or offers for sale its securities consisting of either shares of stock or units of participation in such CDV to any number of qualified buyers and/or non-qualified buyers not exceeding 19 persons in the Philippines during any 12-month period with the specific objective of investing in the corporate debts of large corporations and medium-sized enterprises.

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.

CDVs are exempt from registration requirements prescribed by Republic Act No. 8799, or the Securities Regulation Code. However, such exemption must still be confirmed or approved by the SEC, together with the submission of a simplified prospectus and product highlight sheet.