SEC proposes corporate bond market reforms

The Securities and Exchange Commission is proposing a comprehensive package of reforms to strengthen the Philippine corporate bond market, aiming to make it easier for companies to raise long-term funding while maintaining investor protection standards.

The SEC said the Commission issued on June 23 a draft memorandum circular for public comment to amend the 2015 Implementing Rules and Regulations of Republic Act No. 8799, or the Securities Regulation Code.

The proposed reforms seek to align regulatory requirements more closely with the characteristics and risk profile of debt securities while promoting a more efficient and accessible fundraising environment.

“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,” SEC Chairperson Francis Lim 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,” he added.

Central to the proposal is a disclosure framework designed for bond investors rather than adapted from rules for equity offerings.

For Debt-Only Issuers, or DOIs, which are companies that raise funds solely through bonds rather than shares, the framework would focus on information bondholders need, including an issuer’s creditworthiness and capacity to service and repay debt.

Publicly listed companies that also issue bonds would be required to provide an added bond-focused disclosure document so their bondholders are as well informed as investors in bond-only companies.

The SEC said ongoing reporting would be matched to the type of security an investor holds.

The draft memorandum circular also provides a more proportionate disclosure framework for eligible mid-market issuers.

Under the proposal, medium-sized enterprises as defined under Republic Act No. 9501, or the Magna Carta for Micro, Small, and Medium Enterprises, that qualify as DOIs would benefit from ready-made disclosure templates, suggested limits on document length, and fewer years of financial statements.

The SEC said these measures are intended to reduce compliance costs and preparation burdens that may discourage growing companies from accessing the capital market while preserving transparency and comparability for investors.

Another major reform is the proposed introduction of a Medium-Term Note Program, which the SEC described as a “register once, issue many times” facility.

Under the program, an eligible company may set up a single bond program it can draw on for multiple offerings over a period of up to five years.

Under the proposed framework, a company would have its main disclosure document reviewed and approved by the SEC once.

The company may then launch later bond sales by filing a short notice of the specific terms without undergoing a separate SEC review for every issuance.

The SEC said this would allow issuers to access funding more efficiently, respond more quickly to favorable market conditions, and reduce transaction costs tied to repeated offerings.

The Commission is also proposing to modernize registration procedures by publishing required notices online instead of in newspapers.

The proposal also clarifies rules for updating disclosures when information changes during an offering.

The SEC said the reforms, taken together, represent one of the most significant updates to the public offering framework for debt securities in recent years.