SEC overhauling rules on credit rating agencies

For stronger corporate bond market

MANILA, Philippines — The Securities and Exchange Commission (SEC) plans to overhaul rules governing credit rating agencies (CRAs) to ensure a more comprehensive accreditation and supervisory regime as part of a broader capital market development agenda.

The proposed strengthened regulatory framework introduces rigorous oversight across key operational areas, including accreditation requirements, corporate governance, analyst competence and independence, the integrity of the credit rating process, transparency and reporting obligations, as well as the development and application of rating methodologies.

“These proposed reforms support a credit rating regime that fosters the trust of both institutional and retail investors,broadening market participation beyond a narrow investor base toward deep and inclusive capital markets,” the SEC said.

CRAs are those principally and regularly engaged in the business of performing credit evaluation of corporations and business projects or of debt issues with the intention of assessing the overall creditworthiness or of ascertaining the willingness and ability of the issuer to pay its financial obligations as they fall due.

The assessment is translated by credit ratings assigned periodically and publicly announced.

The proposed rules seek to expand the scope of application explicitly and materially by covering ratings for corporate bonds, commercial paper, structured products, sukuk instruments, covered bonds, sustainability-linked instruments and any other debt security in the Philippines.

The SEC said the expanded scope ensures that the regulatory perimeter is already in place as new instruments develop in the Philippine market.

A strengthened minimum capital requirement for CRAs is also being introduced under the proposed rules, setting the minimum capital requirement at P50 million at the point of accreditation, rising to P70 million three years after accreditation.

The SEC said the three-year step-up in the capital requirement is designed to give an applicant CRA a reasonable period to establish its operations and build its revenue base before the higher threshold applies, while ensuring that the requirement scales with the CRA’s expected operational footprint as it matures.

In addition, the new rules seek to introduce a materially strengthened set of controls over the ownership structure of CRAs, an area where the current rules are largely silent, according to the commission.

It said the core provision is that any change to the direct or indirect shareholding structure of a CRA that results in a new controller, including the creation of a rating holding company, requires the prior approval of the commission before it takes effect.