• PH to pioneer Asean+3 bond issuance program

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    The Philippines is aiming to be one of the pioneer countries to take part in the Asean+3 multi-currency bond issuance framework, an Asian Development Bank (ADB) initiative that would allow participating nations to facilitate bond issuances across each other’s jurisdictions.

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    Securities and Exchange Commission (SEC) chair Teresita Herbosa told reporters that the framework is similar to a multilateral agreement, under which corporations belonging to participating countries would enjoy preferential treatment in terms of issuing bonds in the host country, since the host-member countries will be obliged to accommodate such bond issuances under streamlined processes and with least restrictive requirements.

    The initiative is targeted to materialize within the year.

    “The [participating]countries that would sign off in the agreement would be able to sell each other’s bonds in each other’s jurisdiction. The registration [for the issuance]by the home [any Asean+3 member]country would be accepted by the host country, under minimal conditions, it is like a multilateral agreement,” Herbosa said.

    Meanwhile, SEC Associate Commissioner Ephyro Luis Amatong, explained that the Asean+3 (Japan, South Korea and China) multi-currency bond issuance framework (Ambif) is a mechanism by which signatory countries can issue bonds cross-border.

    “The Philippines is one of the six or seven countries that are targeted to be one to have pilot issuances. There is now a pilot issuance by a Japanese bank of a bond in Thailand in Thai baht so we are hoping that it will happen in the Philippines too,” Amatong said.

    At present, Amatong said that there are two ongoing exploratory attempts to issue a similar cross-border bond in the Philippines.

    The first exploratory discussion pertains to Philippine domestic corporations doing business in any Asean+3 member countries to issue bonds in the local currency of the host country, while the second discussion is for the Philippines, as a host country, to allow the issuance of peso-denominated bonds by Asean+3 country companies that have operations here.

    “Let us say you are a Japanese company, which is an Asean+3 member, doing business in the Philippines, you can raise money here in peso terms to finance, say your manufacturing plant here. So for example, your income is in peso and your debt is in peso, it will no longer be converted from yen to peso. Then you are not exposed to foreign currency rate fluctuations, that is the idea,” Amatong explained.

    When asked who the parties are in the said exploratory discussions, the government official said, “both the issuers [domestic companies]and the investment house, so in one case it is the issuer who is looking at it as an option and in another case it is the investment house that is looking at providing this facility for foreign issuances in the Philippines.”

    Amatong said that they are hopeful that the Philippines could finally take part in this strategic investment initiative within the year.

    “So in the same way that Philippine companies which are in other Asean countries like Petron is in Malaysia, Manila Water is in Vietnam, Robinsons Group in Indonesia since they are doing business there and they are earning in the local currency, they could also take advantage of this framework so that they need not convert their peso to US dollar and then [convert it again to]the local currency, because the bond will be raised in the local currency of the host signatory-country,” he added.

    Apart from Thailand and the Philippines, other countries that are being tapped to pioneer the initiative are Singapore, Malaysia, Indonesia, and Thailand, along with the non-Asean member countries Japan, China, and South Korea.

    “The [Ambif] framework right now, given the analysis of the ADB, it is possible right now to issue a cross-border bond under the Ambif in the Philippines because it takes advantage of the regulation that is already in place. It does not require any revisions in the framework already . . . What is needed now is [a company]for whom it makes business sense to issue that in the Philippines,” Amatong said.

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