Logo of Phnom Penh Post newspaper Phnom Penh Post - Corporate bonds edging closer to launch

Corporate bonds edging closer to launch

Corporate bonds edging closer to launch

Cambodia's market regulator has finalised regulations for establishing a corporate bond, moving one step closer to introducing a new capital market tool that would allow companies to raise funds for expansions, debt refinancing or acquisitions, officials announced yesterday.

In a press release, the Securities and Exchange Commission of Cambodia (SECC) said it had approved three initiatives that solve the remaining regulatory hurdles for bond issuance, bond representatives and allowing credit rating agencies to provide ratings.

Sou Socheat, director-general of SECC, told The Post that now that the government has established regulations for a corporate bond market, those seeking to issue bonds can submit a letter of intention
to the market regulator for approval.

“I believe that there will be many companies that want to issue bonds as it provides them more options to raise funds without changing the structure of equity in the company,” Socheat said, adding that SECC was looking for a first-mover to demonstrate the viability of a Cambodian bond market.

“There will be also many public investors who are willing to buy corporate bonds, if issuers offer good interest rates,” he added.

SECC has identified three different types of corporate bonds it would potentially issue, including a secured bond, guaranteed bond and a plain bond, providing an international credit rating agency can give them a value.

Socheat added that SECC will closely monitor the issuer to ensure their ability to repay the bond’s face value and distribute interest payments regularly.

Han Kyung Tae, managing director of Yuanta Securities, said he was pleased that the government has finally made tangible progress in establishing a local bond market. He added that a diversified product line would help the sluggish local capital market garner more interest from investors.

“I believe there will be some potential issuers as well as investors interested in the new opportunity,” he said. “Financial companies in the banking sector, one of the fastest growing sectors, may be interested in diversifying their funding sources in particular for their long-term debt financing.”

Han added that since the bond prices will be based on the soundness of the business, which is generally measured by credit ratings, a government bond would normally be used as the barometer for bonds issued by companies.

However, he added that despite Cambodia not having government bonds, with a “proper and reliable credit rating system in place” the issuance of a corporate bond “wouldn’t be an impossible obstacle”.

He also added that given the highly dollarised economy it would make sense to issue bonds in US dollar instead of trying to promote riel bonds, as future cash flows will continue to be based on the US dollar.

MOST VIEWED

  • All inbound flights set to face added scrutiny

    Ministry of Health spokesperson Or Vandine said on Monday that the ministry is monitoring all inbound flights, after it was announced that only those from Malaysia and Indonesia will be temporarily cancelled from August 1. Vandine said on Monday that the two countries were identified as

  • Flights from Indonesia, Malaysia cancelled

    A Ministry of Health official has warned of the possibility of Covid-19 spreading through community transmission after the total infected cases in the Kingdom rose to 225. Ministry spokeswoman Or Vandine told reporters on Saturday that the possibility of community transmission cannot be overlooked and that

  • Man in quarantine dies of ‘overdose’

    The Ministry of Health on Thursday said a Cambodian migrant worker who died while being isolated at a quarantine centre in Tbong Khmum province’s Kroch Chhmar district may have died from syncope or overdose of tablets. In a statement, the ministry said the 21-year-old

  • Ministry set to reopen 20 schools in August

    The Ministry of Education, Youth and Sport will allow 20 high-safety-standards schools to reopen next month despite new cases of Covid-19 in the country. Ministry spokesperson Ros Soveacha wrote in a Telegram message on Wednesday that the schools are in Phnom Penh, Siem Reap and Battambang.