Hattha Kaksekar Limited (HKL) is set to become the first company to issue corporate bonds in the Kingdom, and it is doing so to the tune of 80 billion riel ($20 million).
The firm has received approval from the National Bank of Cambodia (NBC) for the move.
HKL announced on Friday that the Cambodian microfinance firm plans to initially offer $20 million in bonds, and increase this by another $10 million if there is high demand.
The bonds will reach maturity in three years with a coupon rate from 7.5 to 8.5 per cent per year.
President and CEO of HKL, Hout Ieng Tong, said: “HKL is going to use the net proceeds [from the bonds] for funding growth of our lending business, working capital and general corporate purposes.
“The proceeds from HKL’s Khmer riel bond issuance will also support local micro-, small- and medium-sized enterprises,” he said.
After obtaining the NBC’s green light, HKL will submit documents to the Securities and Exchange Commission of Cambodia (SECC) for approval. Its approval forms for listing on the Cambodia Securities Exchange (CSX) are currently pending.
SBI Royal Securities is a financial adviser and underwriter for HKL’s bonds issuance project. The tentative subscription period for the bonds will be from September 26 to October 1.
In a statement in May, the International Finance Corporation (IFC), a World Bank Group subsidiary focusing on private-sector investment in developing countries, disclosed a proposal to invest up to $20 million in riel bonds issued by HKL.
In the statement, the IFC said it would leverage its global experience in local bond issuances to help HKL issue the first corporate bonds in the country.
Seng Chan Thoeun, managing director at SBI, told The Post that the bonds will give local investors more options, as up to now only stocks have been available on the CSX.
“Bonds can provide a stable source of low-cost funding. This is a very important step in furthering the development of the Cambodian capital market,” he said, adding that economic benefits will begin to stack up as more companies begin the process of issuing bonds.
HKL is the third largest microfinance deposit-taking institution (MDI) in the country in terms of assets, loan portfolio and net profit. It was ranked second in the Kingdom in terms of customer deposits as of the end of last year.
The company’s gross loan portfolio and customer deposits stood at $576.8 million and $367.4 million, respectively, as of December 31 last year.
At that time, their total assets stood at $69 million and net profit was up to $15.3 million.