Logo of Phnom Penh Post newspaper Phnom Penh Post - LOLC set to be second corporate bond issuer

LOLC set to be second corporate bond issuer

Content image - Phnom Penh Post
LOLC (Cambodia) Plc CEO Sok Voeun. post pix

LOLC set to be second corporate bond issuer

LOLC (Cambodia) Plc is set to become the second issuer of corporate bonds in Cambodia after obtaining an approval for bond issuance from the National Bank of Cambodia (NBC) on Friday, the company revealed on Monday.

Unlike previous corporate bonds, LOLC’s offer investors not only fixed-coupon bonds but also those indexed to foreign exchange markets (forex) – with an interest rate that varies according to foreign currency exchange rates.

LOLC plans to raise 80 billion riel ($19.96 million) through the issuance of its first corporate bonds on the Cambodia Securities Exchange (CSX). The bonds will have a tenure of three years and their final coupon rate will be determined before the subscription period ends.

“We are so glad that we’ve obtained the NBC’s approval on our first bond issuance and that we are able to introduce a new product – forex-indexed bonds – to the market."

“Diversifying our sources of funding, particularly long-term funding, will ensure the institution’s future growth as well as improve its financial position,” LOLC chief executive officer Sok Voeun said.

After obtaining a no-objection letter from the NBC, LOLC will submit the Listing Eligibility Review Application form to CSX and then submit an Application Form for Public Offering of Debt Securities, a disclosure document and other relevant documents to the Securities and Exchange Commission of Cambodia (SECC) to obtain approval.

The listing date for the bonds is expected to be in late March or early April.

Both fixed-coupon and forex-indexed bonds are fully in line with the government’s policy of promoting the use of the local currency, as they are both denominated in Cambodian riel, as will the payments of the bonds’ interest and principal.

Yuanta Securities managing director Han Kyung-tae, LOLC’s adviser and underwriter for the bond project, said forex-indexed as well as inflation-indexed features were common in Latin America and greatly contributed to their bond market development in the late 1980s until the early 2000s. During the period, they almost exclusively issued both government bonds and corporate bonds with such features.

“We believe the forex-indexed bond is a particularly useful product for Cambodia during this transitional period whereby the market will look to achieve two goals – promoting the Cambodian riel and attracting both riel and USD investors to the local capital market,” he said.

Han added that LOLC’s bonds are over-subscribed.

CSX chief operations officer Ha Jong-weon said the news of a second bond issuer proves that diversifying sources of funds among Cambodian companies from the Kingdom’s capital market is a good move.

“In the short term, at least this year, many financial institutions would like to issue bonds due to tax deductions,” he said.

“In the long term, they would like to issue equities through the securities market to save the cost of funds with serious competition in the financial market.”

MOST VIEWED

  • Without shoes or a helmet, a young cyclist steals the show

    Pech Theara gripped the curved handlebars of his rusty old bike, planted his bare feet on its pedals and stormed as fast as he could towards the finish line. The odds were against him as the 13-year-old faced off against kids with nicer bikes at

  • Phnom Penh-Sihanoukville expressway on schedule

    The construction of the more than $1.9 billion Phnom Penh-Sihanoukville Expressway has not been delayed despite the Covid-19 pandemic, with more than 26 per cent of the project completed and expected to finish in about two years, according to Ministry of Public Works and Transport secretary of

  • Singapore group seeks $14M in damages from PPSP over ‘breach of contract’

    Singapore-based Asiatic Group (Holdings) Ltd is seeking a minimum of $14.4 million relief from Cambodia Securities Exchange (CSX)-listed Phnom Penh Special Economic Zone Plc (PPSP) for allegedly breaching a power plant joint venture (JV) agreement. Asiatic Group’s wholly-owned Colben System Pte Ltd and 95 per

  • Over 110 garment factories close

    A government official said on November 22 that at least 110 garment factories had closed in the first nine months of the year and left more than 55,000 workers without jobs – but union leaders worry those numbers could be much higher. Ministry of Labour and Vocational Training undersecretary

  • Cambodia lauded for fight against Covid-19

    Cambodia has drawn global accolades for its handling of the Covid-19 pandemic, with a new report finding that the Kingdom has controlled the pandemic better than any other country in Asia. Dr Takeshi Kasai, director of the World Health Organisation’s (WHO) Western Pacific region,

  • PM vows to protect Hun family

    Prime Minister Hun Sen has vowed to continue his fight against opposition politicians who he said intend to smash the Hun family. Without naming the politicians but apparently referring to former leaders of the Supreme Court-dissolved Cambodia National Rescue Party (CNRP), Hun Sen said there