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$200 million sovereign bond planned for 2023

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The Ministry of Economy and Finance. Heng Chivoan

$200 million sovereign bond planned for 2023

The government plans to issue a $200 million sovereign bond in early 2023, on top of the remaining tranches of the $300 million bond it issued in September through the National Bank of Cambodia (NBC).

These figures match the limits prescribed by the annual laws on Financial Management for their respective year, Ministry of Economy and Finance spokesman Meas Soksensan confirmed to The Post on November 3.

Tranches of the 2022 bond have been put on auction twice on the NBC’s platform on September 7 and 21, he said, adding that eight and six institutions participated in the first and second biddings, respectively, four of which took part in both.

He noted that the results of each auction are published on the NBC’s website.

“The issuance of the 2023 sovereign securities may start at the beginning of the year, and detailed plans are to be published on the Ministry of Economy and Finance’s website in the near future,” Soksensan said, noting that exact dates will depend on “the actual market situation”.

Securities and Exchange Regulator of Cambodia (SERC) director-general Sou Socheat told The Post on November 3 that sovereign securities are set be issued in the amount agreed by the National Assembly in the year’s financial management law, which is $200 million for 2023.

He assured that the issuance process would not be significantly different from year to year, save for the value of the issuance. “The government usually diversifies its debt, meaning that we can borrow from abroad as well as internally by issuing sovereign securities. This is not uncommon, and from now on we will issue one a year,” Socheat said.

At the maiden September 7 issuance, a total of 41,800 out of the planned 100,000 units were sold below the one-million-riel par value, at 998,033 riel, carrying a 2.2 per cent yield-to-maturity rate, a fixed per-annum coupon rate of two per cent to be paid semi-annually, and a tenor of one year.

On September 21, 200,000 units were put up for the second auction, at a par value of one million riel, carrying a fixed per-annum coupon rate of 2.44 per cent to be paid semi-annually, and a tenor of three years. However, the auction was unsuccessful, with bidding failing to reach desired levels.

Soksensan explained that for now, as per the initial policy framework, sovereign securities can only be bought on the primary market, mainly by banking and financial institutions, securities and insurance companies, the National Social Security Fund and similar entities.

“Other investors, including the public, will be able to invest in sovereign securities on the secondary market, which the Ministry of Economy and Finance is pushing to have as soon as possible,” he said.

For reference, the “primary market” is the part of capital market where companies directly issue securities to investors. The “secondary market” is the segment where investors trade the securities bought on the primary market with each other, rather than with the issuing entity.


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