THE NEW YEAR is ushering in opportunities for green finance and possible enhancements to the shelf registration program in the capital market.
The Securities and Exchange Commission (SEC) will work on allowing capital raising for investment in projects with positive environmental impact and improving the shelf registration program this year, among others, this year.
The regulator will look into introducing and promoting green finance and investment in line with the initiative of the Association of Southeast Asian Nations, SEC Commissioner Ephyro Luis B. Amatong told reporters last Dec. 22 interview.
Mr. Amatong cited The Green Bond Principles (GBP) drafted by the International Capital Market Association (ICMA) when asked about the framework of the initiative.
The principles, as updated in June 2016, outline “voluntary process guidelines that recommend transparency and disclosure and promote integrity in the development of the green bond market,” according to ICMA.
The GBP lists categories of projects eligible for green financing. These include renewable energy, energy efficiency, pollution prevention and control, sustainable management of living natural resources, clean transportation and sustainable water management.
ICMA also outlined a process for project evaluation and selection, the management of proceeds from green bonds and reporting guidelines. Aside from advancing green finance in the country, the SEC will study further enhancements to the shelf registration program that has supposedly helped spur fund-raising on the equity and fixed-income bourses.
“That’s definitely a bright spot for the capital markets. And we’ll probably look at ways to make it even more effective,” Mr. Amatong said.
Shelf registration facilitates the issuance of securities in tranches within a particular period under a single registration statement. It, thus, allows issuers to time their capital raising activities depending on their needs or market conditions.
The SEC has enhanced the program under the 2015 Implementing Rules and Regulations (IRR) of the Securities Regulation Code. The revised guidelines, which took effect in November that year, allowed for the issuance of securities in tranches within three years.
The regulator had previously required issuers to file an updated registration statement for the subsequent offering of securities under shelf registration.
In 2015, the SEC further made registration fees payable in tranches and proportional to the value of the issue. It extended the validity of financial statements to 180 from 120 days alongside to tackle delays in public offerings.
“We will see what else could be done to make it more useful,” Mr. Amatong said, when asked about the specific reforms — extending the shelf registration period beyond three years, for instance — the regulator intends to implement.
The SEC official also cited the development of a market for overnight index swaps, as proposed by the Money Market Association of the Philippines when it sought a self-regulatory organization status.
“Given that the expectation is there will be a rise in interest rates consistent with the rise in US interest rates, that will be useful for the banks. So, that is something that we’ll be looking at early next year,” Mr. Amatong said during the Dec. 22 interview.
In addition, the SEC will continue working on the introduction of infrastructure bonds this year. The framework will cover projects outside the public-private partnership (PPP) program of the government.
The Philippine Stock Exchange, Inc. published last month the supplemental listing and disclosure rules applicable to PPPs undertaking infrastructure projects worth at least P5 billion.
Mr. Amatong expects such reforms to further boost activity on the Philippine capital market that continued to benefit from “sufficient liquidity” last year, with local companies having managed to successfully raise funds despite the volatility.
03 January 2017
By Keith Richard D. Mariano
