Bangko Sentral ng Pilipinas approved the relaxation of rules concerning the issuance of bonds by banks in a move to further deepen the corporate bond market, Governor Nestor Espenilla Jr. said on Friday.
Espenilla said at the sidelines of an event the move could possibly prompt banks to issue bonds rather than the long-term negotiable certificates of time deposits, or LTNCDs.
“We issued the rules that will facilitate banks to issue bonds into the market. As a way of raising long-term money, they can [now] issue bonds, they can consider issuing bonds to support their growth. Down the road, that should replace LTNCDs,” Espenilla said.
Citing the difference between the two, Espenilla said LTNCDs basically were deposit instruments covered by deposits rules. Bonds, meanwhile, are not really deposits and actually are capital instruments.
“These will actually help build the corporate bond market. It’s a kind of corporate bond except that it’s issued by banks,” Espenilla said.