The Securities and Exchange Commission (SEC) is planning a major overhaul of the country’s corporate bond market, aiming to slash red tape for companies seeking long-term funding while preserving protections for investors.

The regulator released a draft memorandum circular on June 23 that proposes comprehensive amendments to the 2015 Implementing Rules and Regulations (IRR) of the Securities Regulation Code. The shifts represent one of the most significant updates to the country’s capital markets framework in years, specifically aiming to decouple the rules governing debt from those that govern equities.

Historically, the local public offering framework evolved primarily around equity issuances. While that approach served the market’s initial needs, regulators now acknowledge that certain requirements are disproportionate to the actual information required by bond investors.

“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,” SEC Chairperson Francis Lim said.

At the core of the new plan is a bifurcated disclosure system. For debt-only issuers—companies that raise funds strictly through bonds rather than shares—the regulatory focus will pivot entirely to creditworthiness and debt-servicing capacity.

Meanwhile, publicly listed companies issuing bonds will be required to submit a supplemental, debt-focused disclosure document to ensure their bondholders are as well-informed as those backing debt-only entities.

The SEC is also introducing a tailored disclosure track for mid-market issuers. Medium-sized enterprises that qualify as debt-only issuers will have access to standardized templates, caps on document length, and abbreviated financial history requirements. The goal is to lower compliance costs that have traditionally locked smaller, growing firms out of the capital markets.

For larger issuers, the most impactful change is the introduction of a Medium-Term Note program. Operating as a "register once, issue many times" facility, it will allow eligible companies to establish a single bond program valid for up to five years. Once the initial master disclosure is approved by the SEC, companies can execute subsequent tranches by filing a short notice of specific terms, bypassing repetitive regulatory reviews. This mechanism allows issuers to capture fleeting, favorable market windows and reduces transaction expenses.

Additionally, the regulator plans to modernize administrative procedures by moving mandatory public notices online, replacing the legacy requirement of newspaper publications. (James A. Loyola)