Prime Minister Hun Sen (second left) inspects the construction of the new Phnom Penh International Airport, now officially named Techo Takhmao International Airport, on Thursday. SPM
Prime Minister Hun Sen on December 9 called for the purchase of the remaining portion of $300 million in bonds issued by Cambodia Airport Investment Co Ltd (CAIC) for the development of a new international airport that is set to serve the capital.
The prime minister made the appeal during his second visit to inspect the construction of the new Phnom Penh International Airport, now officially named Techo Takhmao International Airport, where construction on the first phase of the project is about 27 per cent complete.
“I have a goal. That is to raise capital locally, and achieve that through our Khmer children [Cambodians] with Khmer capital, designs [and] various construction styles from the hands of the Khmer, so we give permission, to guarantee the borrowing and selling of bonds for $300 million with a coupon rate of 5.5 per cent,” Hun Sen said.
He encouraged non-bank private companies to buy the bonds as well, which he said would allow the airport to mobilise more capital and curb its reliance on foreign banks.
Pung Kheav Se, chairman of the airport’s developer Overseas Cambodian Investment Corp Ltd (OCIC), said the company is committed to completing construction on schedule, despite Covid.
Financial companies and state-run institutions have bought a total of $87 million of the CAIC bonds, he said, voicing delight that the funds were derived from local sources.
He listed some of the investors as Foreign Trade Bank of Cambodia, Prince Bank Plc, Asia-Pacific Development Bank Plc, Cambodia Post Bank Plc, Wing Bank (Cambodia) Plc, Chip Mong Commercial Bank Plc and Alpha Commercial Bank Plc.
Others include Sovannaphum Life Assurance Plc, AIA (Cambodia) Life Insurance Plc, Prudential (Cambodia) Life Assurance Plc, Credit Guarantee Corporation of Cambodia Plc (CGCC) and National Social Security Fund (NSSF).
According to Kheav Se, the National Bank of Cambodia (NBC) has rated the bonds as effectively “zero risk”.
Cambodia Securities Exchange (CSX) CEO Hong Sok Hour said the bonds were not issued on the exchange, but noted that CAIC had received permission from the Securities and Exchange Regulator of Cambodia (SERC), and suggested that the company could sell the securities privately.
He explained that bonds are an attractive option for entities that require money but do not want to sell stock to outside investors, instead allowing issuers to schedule coupon dates, or intervals at which predetermined amounts of interest are paid, commonly set quarterly or annually.
“In the case a company issues bonds for sale to public investors, it must be approved by the SERC and listed on the CSX, hence it [CAIC] may not want to go through all the procedures,” he said.
Sok Hour called on more companies to list on the bourse, to provide investors with more choices.
According to Kheav Se, project has cost about $375 million so far, out of the expected $1.500 billion price tag.
He said that capital investment is entirely dependent on funds from the CAIC, which plans to spend $467 million next year, or more than $1.2 million per day.
CAIC is building the airport in collaboration with the State Secretariat of Civil Aviation (SSCA). The first phase of the airport, including a 233,000sqm passenger terminal, is slated to be completed in 2023.
A power supply centre is set to be completed next year, and a 118m-tall air traffic control tower is scheduled to be handed over to Cambodia Air Traffic Services Co Ltd in July.
