At least eight institutions took part in an auction for the 100 billion riel ($25 million) first tranche of the Kingdom’s inaugural sovereign bond worth 1.2195 trillion riel, issued by the government—not by NBC.
An announcement of the results of the first auction, held on September 7, revealed that the total bidding volume was 41,800 units and winning bid rate 2.2 per cent.
The NBC had said in a September 5 statement that the maiden issuance – carried out in single-price auction format – would go live on September 7 from 8am to 2pm, and that the tranche would be issued at par value of one million riel, carrying a fixed per-annum coupon rate of two per cent paid semiannually and a tenor of one year.
Cambodia Securities Exchange (CSX) CEO Hong Sok Hour told The Post on September 8 that the government sees the inaugural sovereign bond offering as a “market test” to gain insight into demand as well as the expectations for state securities, which he noted would provide new options for investors to diversify portfolios and the state to raise funds.
Although the auction’s results may appear lacklustre, Sok Hour argued that “this does not mean that there is no demand”, reasoning that the one-year term and two per cent coupon rate may have put off some investors.
He believes the issuance targets development of the securities market, and is hence welcome, “no matter the size”, and commented that the government “can have other sources of capital available at low interest rates”.
Besides, the approximately $300 million to be received from the bond is the maximum amount that the National Assembly has authorised for the government to raise on the securities market, Sok Hour explained.
Meanwhile, speaking at a May 16 national conference on the CSX, Minister of Economy and Finance Aun Pornmoniroth commented that sovereign securities would enable the state to raise funds for economic development.
“Government bonds are expected to be popular on the Cambodia Securities Exchange, and provide benchmark data for corporate securities trading and financial analysis, as is the case in countries with a growing securities sector,” he said.