CBP Circular Letter

October 16, 1980 CBP CIRCULAR LETTER TO : All Banks and Non-Bank Financial Intermediaries Performing Quasi-Banking Functions The Monetary Board in its Resolution No. 1833 dated October 3, 1980 approved the following guidelines on guarantees for commercial paper issues: "1. As a general policy, banks cannot extend guarantees to commercial paper issuers; 2. The Securities and Exchange Commission (SEC) may register commercial paper issues of entities guaranteed by non-banks without Central Bank authority to perform quasi-banking functions as well as by non-financial enterprises, and by non-banks with quasi-banking functions whenever authorized by the Central Bank to guarantee, subject to the following requirements: 2.1. Guaranteed commercial paper issues shall be stamped as follows: GUARANTEED (signature of guarantor) name in print of guarantor authorized CP ceiling P ( amount ) Outstanding amount as at ( date ) P ________________ Amount subject of guaranteed P __________________ 2.2. Guarantees issued may be transferable, provided: a. there is evaluation and approval by SEC of the new guarantor; prcd b. there are no changes in the terms and conditions of the commercial paper issue subject of the guaranty; c. there is written consent of the creditor; d. the original guarantee disclosure shall be stamped "CANCELLED" and the procedure on Item No. 2.1. above shall be observed. 2.3. The aggregate amount of the guaranty shall form part of the authorized commercial paper ceiling of the guarantor, and a schedule of guarantees to be issued shall be included in the registration statement. Correspondingly, the guaranteed entity shall also include in its registration statement a schedule of guarantees to be obtained; 3. SEC monthly report format on outstanding and total issues of commercial paper of the issuer shall accordingly be revised to monitor guarantees issued, and guarantees obtained by commercial paper issuers; and 4. Non-bank financial intermediaries performing quasi-banking functions extending guarantees shall secure prior approval of the Central Bank before the registration of the commercial paper." Please be guided accordingly. (SGD.) GABRIEL C. SINGSON Senior Deputy Governor