PSE approves rules on dollar securities

MANILA, Philippines – The country’s listed companies would soon be able to offer dollar denominated securities after the Philippine Stock Exchange (PSE) completed  the rules for these so-called DDS.

The introduction of DDS aims to provide issuers the flexibility to meet their capitalization requirements. It also offers an alternative instrument for investors with US dollar deposit accounts.

In the same manner, the product can also attract offshore investors and reduce their currency risk exposure.

The newly approved PSE rules provide the framework and guidelines for the listing, trading and clearing and settlement of securities that will be issued in dollar denomination, PSE president and CEO Hans Sicat said.

“The goal is to provide a new investment product that both our issuers and investors can leverage on to address their expanding requirements. We are grateful for the collective support of the SEC, the BSP and all the stakeholders in helping develop these rules, ” Sicat said.

The Securities and Exchange Commission (SEC) earlier approved the rules governing the securities.

According to the new DDS rules, PSE listed companies may issue a new set of securities, either common or preferred shares, which are quoted, traded, and settled in US dollars. 

“This will provide listed companies the venue to raise new capital in US dollars to meet their dollar needs.  It also gives investors with dollar holdings an investment vehicle that could provide viable returns,” Sicat said.

However, the PSE said while the SEC has approved the DDS rules, its implementation will be rolled out once the necessary infrastructure for the listing, trading and clearing and settlement is put in place. 

The PSE has scheduled seminars and information awareness campaign for trading participants and other stakeholders.

“We shall be working on preparing the market and infrastructure over the next four to six weeks to ensure the smooth and successful introduction of DDS.  Being a new product, it is important for the PSE that all stakeholders are properly informed of the dynamics of DDS,” Sicat said.

Del Monte Pacific Ltd. will be the first to issue DDS. The proposed issue will amount to as much as $360 million, with an initial tranche of up to $250 million and the balance issuable within three years.

Over the past four years, the PSE has been working on introducing new products and services as an integral component of its strategy to expand the market, including providing rules for the listing for public-private partnership projects or PPPs.

The PSE also hopes to be able to list real estate investment trusts (REITs).

“We understand that the government is reviewing the relevant rules for REITs and we hope this will result in the first REIT listing in the country. With all the efforts on the product development front coming to fruition, we look forward to an exciting 2017,” Sicat said.