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First issuance of $200M 2023 sovereign bond slated for January

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The finance ministry plans to issue the first tranche of a $200 million sovereign bond later this month. Heng Chivoan

First issuance of $200M 2023 sovereign bond slated for January

The Ministry of Economy and Finance plans to sell an 813 billion riel ($200 million) sovereign bond this year, issued in several tranches, with the first scheduled at an undisclosed date later this month.

The National Bank of Cambodia (NBC) and Cambodia Securities Exchange (CSX) have been selected as issuing agencies for the debt security, which will be issued with a par value of one million riel, carrying as-yet undisclosed fixed per-annum coupon rates to be paid semi-annually, the ministry said in a statement.

The statement said the bond will be available in one-, two-, three-, five-, 10- and 15-year terms with new issuances every four weeks, adding that a total 200 billion riel worth of one-year and three-year bonds, each, will be auctioned in three batches, and a total 120 billion riel worth of two-year bonds will be auctioned in two lots.

Also, a total of 40 billion riel worth of 10- and 15-year bonds, each, will be auctioned in two batches, it said, adding that the 213 billion riel five-year tenor tranche would be issued by private placement.

Ministry spokesman Meas Soksensan affirmed to The Post on January 18 that the new $200 million offering is independent of last year’s $300 million sovereign bond, hinting that subsequent tranches of the latter may still be issued.

He noted that these amounts correspond to the limits prescribed by the annual laws on Financial Management for their respective year.

Tranches of the 2022 bond have been put on auction twice on the NBC’s platform on September 7 and 21, he said, adding that eight and six institutions participated in the first and second biddings, respectively, four of which took part in both. The results of each auction are published on the NBC’s website, he noted.

“The issuance of the 2023 sovereign securities may start at the beginning of the year, and detailed plans are to be published on the Ministry of Economy and Finance’s website in the near future,” Soksensan said, noting that exact dates will depend on “the actual market situation”.

He explained that for now, as per the initial policy framework, sovereign securities can only be bought on the primary market, mainly by banking and financial institutions, securities and insurance companies, the National Social Security Fund and similar entities.

“Other investors, including the public, will be able to invest in sovereign securities on the secondary market, which the Ministry of Economy and Finance is pushing to have as soon as possible,” Soksensan said.

For reference, the “primary market” is the part of capital market where companies directly issue securities to investors. The “secondary market” is the segment where investors trade the securities bought on the primary market with each other, rather than with the issuing entity.

Speaking to The Post on January 18, CSX CEO Hong Sok Hour opined that the finance ministry had recruited the local bourse as an issuing agency due to its experience with corporate bonds.

With the NBC and CSX onboard, and potentially higher coupon rates, “we expect that the issuance of the sovereign bond in 2023 will go better than in 2022”, he said, noting that the first tranche of last year’s offering was issued only in September, as opposed to January as planned in 2023.

He voiced optimism for the CSX’s contributions to the issuance, citing the local bourse’s “successful track record with private bonds … [and] raising lots of capital as planned by the government” as well as its “large investor base”.


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