PART THREE. FINANCIAL ACCOUNT TRANSACTIONS
Chapter I
LOANS AND GUARANTEES

Section 22. General Policy. The BSP shall regulate foreign/foreign currency loans/borrowings (including those in the form of bonds/notes/other debt instruments) so that these can be serviced in an orderly manner and with due regard to the economy’s overall debt servicing capacity.

1. Projects/programs/purposes to be funded by the foreign/foreign currency loans/borrowings (including those in the form of bonds/notes/other debt instruments) must be legitimate and not contrary to laws, regulations, public order, public health, public safety, or public policy.

2. Foreign loans/borrowings (including those in the form of bonds/notes/ other debt instruments and those covered by derivatives transactions¹²) as well as foreign currency loans from banks operating in the Philippines to be obtained by the public sector as well as the private sector that will be publicly-guaranteed shall require prior BSP approval unless otherwise indicated in the FX Manual.

   For amendments/changes to these loans, the follow​​ing shall be complied with:

   Nature of Amendment	Requirement
   I. For public sector loans with MB approval-in-principle; and For publicly-guaranteed private sector loans with MB approval
   a. Change in: borrower/guarantor; purpose; financial terms and conditions of loans/borrowings 3 (e.g., those involving change in: loan amount; interest rate; fees, charges or other costs; frequency of payments/servicing; loan tenor/maturity)	MB approval shall be obtained prior to the signing of the covering agreement/ effectivity of change.
   b. Change in: creditor or creditor’s name (e.g., due to merger; corporate restructuring; among others); availability/closing date; financial ratios; covenants; related hedging instruments; changes other than those in item a above	Notice to the BSP shall be sent within one (1) month from availability of information.
   II. For public sector loans with final MB approval; and For publicly-guaranteed private sector loans with BSP registration
   a. Change in: borrower/guarantor; purpose; financial terms and conditions of loans/borrowings13 (e.g., those involving change in: loan amount; interest rate; fees, charges or other costs; frequency of payments/servicing; loan tenor/maturity; prepayments/acceleration of payments)	MB approval shall be obtained prior to the signing of the covering agreement/ effectivity of the change.

 

3. Foreign loans/borrowings (including those in the form of bonds/notes/other debt instruments and those covered by derivatives transactions¹²) of the private sector14 that are not publicly-guaranteed shall be registered with the BSP if these will ultimately be serviced with FX resources of AABs/AAB forex corps.

4. All foreign currency loans (whether in favor of residents or non-residents) extended by banks operating in the Philippines shall be reported by the creditor bank to the BSP using the prescribed forms (Annexes E.4 and E.5). For loans extended to non-residents, these cannot be serviced with FX resources of AABs/AAB forex corps.

5. Foreign loans/borrowings (including those in the form of bonds/notes/other debt instruments)/foreign currency loans (including interbank loans) that are not publicly-guaranteed obtained by private sector banks operating in the Philippines, as well as those obtained by private sector non-bank financial institutions with quasi-banking functions, shall not be subject to prior BSP approval and subsequent registration but shall comply with: (a) Sections 22.7 and 22.8, and Appendices 1 and 1.3 (as may be applicable) of the FX Manual; (b) pertinent provisions of the MORB/MORNBFI; and (c) other applicable laws, rules and regulations.

6. Applications for BSP approval/registration of loans shall be filed through the BSP’s online system and shall be assessed the applicable fee as indicated under Appendix 20 of the FX Manual.

7. All resident entities (public¹⁵ and private sectors) intending to obtain medium- and long-term foreign loans, including offshore issuances of debt instruments shall submit to the BSP-IOD their annual foreign borrowings plan (FBP) using the prescribed form (Annex D.3) every end-September for borrowings for the following year. Proposed onshore issuances by residents of debt instruments that require settlement in foreign currency shall likewise be reported in the FBP.

   Any changes to the submitted plans shall be communicated in writing to the BSP-IOD within two (2) weeks from availability of information for monitoring purposes.

8. For statistical purposes, all foreign loans/borrowings (including those in the form of bonds/notes/other debt instruments), whether BSP-approved/registered or not, shall be regularly reported to the BSP-IOD, using the prescribed forms (Annexes E.1, E.2, and E.316) within the prescribed deadline until the obligations are fully extinguished.

 

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¹² Refer to foreign loans/borrowings that are hedged/funded by derivatives

¹³ Excluding change in: creditor or creditor’s name (e.g., due to merger; corporate restructuring; among others); availability/closing date; financial ratios; covenants; related hedging instruments

¹⁴ But excluding foreign loans/borrowings of the following private sector entities: (a) banks; and (b) non-bank financial institutions with quasi-banking functions covered by Section 22.5 of the FX Manual

¹⁵ Public sector entities include the following: (a) National Government, its agencies and instrumentalities; (b) government-owned and controlled corporations (GOCCs); (c) government financial institutions (GFIs); and (d) local government units (LGUs).

¹⁶ Annex E.3 shall be submitted for initial reporting of foreign loans obtained without prior BSP approval/registration.