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​​​​​​​​​​​Guide to FX Tra​nsactions - Foreign Loans, Guarantees and Other Financing Schemes/Arrangements
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​​​​​​​​​​Guarantees and Other Similar Arrangements​

​Guarantees and Other Similar Arrangements​​​

Annex GAnnex HAnnex AServicing Under Guarantees - Supporting Documents

 
Guarantees and Other Similar Arrangements

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  • Guarantees or similar arrangements applied for, or issued, by the public sector (excluding public sector banks and quasi-banks) for the benefit of a non-resident shall require prior BSP approval.
  • Guarantees (including risk take-over and similar arrangements) applied for by the private sector do not require prior BSP approval and registration. To allow the private sector to pay the obligations under the guarantees using foreign currency purchased from banks, banks acting as issuer or beneficiary of the said guarantees shall report the transactions to the BSP (Annex G-Part A if bank is issuer; or Annex G-Part B if bank is beneficiary) until the contingent obligations are fully paid. These guarantees are as follows:​​

  • Guarantees to be issued by resident banks (including public sector banks) and non-bank financial institutions with quasi-banking functions, in favor of non-residents such as: payment guarantees (e.g., bid bonds, performance bonds, advance payment bonds); and guarantees to secure foreign obligations of residents which do not partake the nature of a foreign loan.
  • Guarantees to be issued by non-resident banks/financial institutions as well as other non-resident entities to secure peso loans/foreign currency loans of the private sector from banks operating in the Philippines and non-bank financial institutions with quasi-banking functions.

  • Guarantees that are related to duly approved and/or registered loans/borrowings must already form part of the loan terms submitted/reported to BSP. In case of a call on the guarantee:

  • The borrower/guarantor shall notify the BSP at least 10 banking days prior to target date of payment of the call on guarantee to allow such payment using foreign currency purchased from banks; and​
  • The borrower shall comply with pertinent rules covering the underlying loan obligation (e.g., loan registration or reportorial requirements).

  • Guarantees or similar arrangements which may give rise to the obligation of a resident to non-resident (e.g., those issued by a non-resident to guarantee the performance of an obligation of a non-bank resident with another resident), other than those covered by the preceding paragraphs require registration with the BSP to allow payment under such guarantees using foreign currency purchased from banks:

  • The filing of applications for registration shall be made within six (6) months from date of signing of the covering agreement but not later than 15 banking days from target date of purchase of foreign currency.
  • The resident obligee (e.g., issuer) must also report regularly to the BSP (Annex H) until the contingent obligations are fully paid.


  • ​Foreign currency may be purchased from banks to pay the obligations of residents under the guarantees without prior BSP approval, upon submission to banks of a duly accomplished application to purchase foreign currency (Annex A), supported by documents listed under Appendix 1.3.​



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Created:6/17/2020 3:06 PM   by:  Pambid Frederick D.
Modified:8/26/2020 5:56 PM   by:  Pambid Frederick D.