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BSP sees the transition to bonds, commercial paper as an alternative source of financing
MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) expects banks to turn to the issuance of bonds and commercial paper instead of long-term negotiable certificates (LTNCD) to operate the domestic capital market. Governor Nestor Espenilla Jr. said that the Monetary Council has approved the rules that would facilitate the issuance of bonds as an alternative source of financing.
"As a means of raising money in the long run, they can issue bonds to support their growth," Espenilla
The LTNCDs have been an effective way for banks to obtain financing profitable while offering a new investment product to their own deposit base, most of which are looking for long-term assets offering higher returns than traditional term deposits.
The banks that have so far issued LTNCDs this year include China Bank with 10.25 billion pesos, followed by BDO Unibank with 8.2 billion pesos, Security Bank with 5.78 billion pesos , Union Bank with 3 billion pesos, and Robinson The BSP expects that bonds and commercial paper will replace LTNCDs as the main source of funding for Philippine banks.
"This will really help build the corporate bond market. This is a kind of corporate bonds, except that it is issued by banks. "
In October of last year, the Monetary Council approved amendments to the relevant regulations to streamline the requirements on the issuance of bonds and commercial papers by banks and
The amendments include deleting the features of the minimum requirements, such as the requirement for eligible collateral to prevent banks from issuing debt.
The revised regulations, however, reiterate respect for the Securities Act and its
"The bottom line is like a non-financial corporation, an obligation may be issued by a bank as a result primarily of the rules of issuance of the obligations of the SEC, "he said.
with greater flexibility in the capital market exploitation as an alternative source of finance.
This is also consistent with e the BSP, as well as other financial regulators, to stimulate the development of the domestic bond market.
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