The Securities and Exchange Commission said it plans to come up with rules that will allow companies with infrastructure contracts under the public-private partnership scheme to issue and list “project bonds” with the Philippine Dealing & Exchange Corp.
SEC commissioner Ephyro Luis Amatong said in a forum sponsored by PDEx regarding project bonds that the corporate regulator aimed to approve rules on alternative funding source for infrastructure companies aside from bank loans.
Amatong said while there was adequate liquidity at the moment, the capital markets should still be able to offer rich and practical alternative funding source for capital intensive infrastructure projects in case the liquidity diminished.
The SEC also approved last year the PPP listing rules of the Philippine Stock Exchange to allow companies with PPP contracts to raise funds through the stock market.
First Metro Investments Corp. executive vice president Justino Ocampo said there was a need to offload some of the financing requirements on infrastructure firms.
“The projects are growing and we expect them to grow as the economy grows. Meanwhile, the banks have not grown as fast. So you have a case of requirement increasing and supply of debt financing not growing as fast,” Ocampo said.
“So for us investment banks, holy grail is project bonds to retail, if possible. The objective is to offload most of the financing to the capital markets,” Ocampo said.
PDEx said data from the Public-Private Partnership Center showed the country had vast requirements for funding infrastructure projects amounting to nearly P6 trillion.
“While these capital intensive endeavors are currently served by the traditional route of commercial bank loans, the long-term nature of projects, the constant overhang of banks’ single borrower limits and the tightening regulations on bank capital and liquidity could throw into question the sustainability of this funding structure,” PDEx said.
