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MFI to issue first corporate bond

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The Cambodia Securities Exchange is to list MFI Hattha Kaksekar Ltd as its sixth company. Hong Menea

MFI to issue first corporate bond

Cambodian microfinance institution (MFI) Hattha Kaksekar Ltd (HKL) yesterday kicked off a roadshow for its first ever corporate bond in the Kingdom.

Geared towards attracting prospective investors, it became the first company to issue corporate bonds in the Kingdom and plans to raise 120 billion riel ($30 million) to fund the growth of its lending business.

The company plans to issue 1.2 million in corporate bonds, worth 100,000 riel per unit.

The bond maturity is three years with a coupon rate from 7.5 to 8.5 per cent per year.

HKL president and CEO, Hout Ieng Tong, said during the event yesterday that the bonds issuance is expected to be successful despite the country’s lack of experience.

“When we started preparing [to issue the bond], many investors contacted HKL to invest in our bonds,” he said.

The issuance of HKL’s corporate bonds marks the creation of the local debt capital market.

‘More dynamic market’

Shuzo Shikata, CEO of SBI Royal Securities, the bond’s sole underwriter, said it created a new and sustainable funding source for companies, allowing them and the Cambodian economy to continue with impressive growth.

“This bonds also help create a more dynamic market where investors now have more tools and strategies to invest their money,” Shikata said.

The International Financial Corporation has already committed to investing up to 80 billion riel to help establish the Cambodian bond market, while Vattanac Bank will invest 20 billion riel in the bond.

Cambodia Commercial Bank and Cambodian Reinsurance Company (Cambodia Re) committed to invest an undisclosed amount.

Vattanac Bank general manager Chan Kok Choy said the company’s decision is an expression of support for the market.

“We are also impressed by HKL’s financial performance, good track record, management, shareholders and prospects,” he said.

The company will enter the subscription phase from October 24 to October 31, while listing on the Cambodia Securities Exchange (CSX) is scheduled for November 1.

Investors have to place at least $500,000 in the bond in the primary market and add $100,000 to each incremental investment if they wish to buy more.

HKL will become the sixth company to be listed on the CSX.

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