THE Securities and Exchange Commission (SEC) is proposing to broaden the range of companies that may qualify for a planned mid-market debt issuance framework, as it refines rules aimed at making public bond offerings more accessible and efficient.
Under a second exposure draft issued on Aug. 28, the SEC expanded the eligibility criteria for mid-market issuers to include thresholds based on total assets, paid-up capital, and number of employees.
The changes followed stakeholder feedback on an initial draft released for public comment in June.
The revised proposal provides that an eligible mid-market issuer must meet at least two of three criteria: fewer than 200 employees, total assets not exceeding P500 million, or paid-up capital not exceeding P200 million.
The issuer must also obtain a credit rating from an SEC-accredited credit rating agency for the debt securities being registered.
The SEC said the revisions were intended to better identify companies that could benefit from the proposed mid-market debt issuance framework.
“The substantive feedback was largely implementation-oriented, with stakeholders primarily seeking clarification on the practical application of the proposed amendments rather than the underlying policy frameworks introduced,” the SEC said.
Stakeholders were generally supportive of the proposed reforms and recognized their potential to improve the efficiency and accessibility of public debt offerings, it added. The SEC received 88 comments during the first consultation, of which 73 were carried forward for substantive review.
The second exposure draft is open for comments until Sept. 7.
The SEC is also refining its proposed medium-term note (MTN) framework, which would allow issuers to offer debt securities through multiple series under a single program for an availability period of up to five years.
Under the proposal, an issuer would establish an MTN program through a base prospectus covering the program as a whole. The SEC would review and authorize the base prospectus before any series could be issued.
The commission clarified in the revised draft that its authorization of the base prospectus would constitute the Permit-to-Sell for the entire MTN program, eliminating the need for a separate permit for each succeeding series.
“The Commission’s authorization of the base prospectus constitutes the Permit-to-Sell (PTS) for the program as a whole; no additional or separate PTS is required for the establishment of the program beyond such authorization,” the draft said.
The final terms for each series would constitute a filing with the SEC and would not require separate commission review or authorization before the issuer could proceed with the offering.
The MTN program would be available to any registrant, including debt-only issuers, eligible mid-market issuers, and companies with registered equity securities.
The revised proposal also introduces and refines definitions for debt-only issuers and current base prospectuses, while setting different registration, disclosure, and reporting requirements depending on the type of issuer.
A debt-only issuer would refer to a registrant that has registered debt securities under the Securities Regulation Code but has no class of equity securities registered or listed on an exchange.
An issuer that subsequently registers or lists equity securities would cease to qualify as a debt-only issuer and would transition to the reporting regime applicable to issuers with both registered debt and equity securities.
The SEC also proposed clearer transition rules between reporting regimes and retained semiannual management discussion and analysis reporting for debt-only and eligible mid-market issuers.
The proposed amendments form part of broader changes to the public-offering regime that seek to separate disclosure requirements for debt and equity issuers, establish the mid-market debt issuance framework and MTN program, and streamline the registration process for public debt offerings. — Alexandria Grace C. Magno
