SEC eases rules on bond issuance

The Securities and Exchange Commission (SEC) has proposed changes to debt securities rules that would simplify bond issuances, lower compliance costs and give companies faster access to long-term funding while maintaining investor protection standards.

“Over the years, our public offering framework has largely evolved around equity issuances,” SEC Chairman Francisco Ed. Lim said in a statement.

“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,” he added.

The SEC on June 23 released a draft memorandum circular proposing changes to the implementing rules and regulations of the Securities Regulation Code.

The proposed changes seek to align disclosure and registration requirements with the characteristics and risks of debt securities rather than applying standards largely designed for equity offerings.

“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,” Lim said.

Under the proposal, companies that raise capital exclusively through bonds would be allowed to focus disclosures on information most relevant to bondholders, including creditworthiness and the ability to pay debt.

For listed companies that also issue bonds, the SEC plans to require a supplemental bond-focused disclosure document to provide investors with information tailored to fixed-income securities.

The regulator said the draft rules would also introduce a more proportionate disclosure framework for mid-sized issuers.

“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,” the SEC said.

Another key proposal is the introduction of a medium-term note program, which would let qualified issuers register a bond program once and conduct multiple offerings over a period of up to five years.

Under the framework, companies will undergo a single review of core disclosures by the SEC. Subsequent bond issuances under the program will require only a shorter filing outlining the terms of the offering, eliminating the need for a full regulatory review each time.

The SEC is also proposing to modernize registration procedures by allowing required notices to be published online instead of in newspapers and by clarifying rules on updating disclosures when material information changes during an offering.

The draft circular is open for public comment until July 9.