Royal Group Phnom Penh SEZ Announces Green Bond Issuance
Royal Group Phnom Penh SEZ (RGPPSEZ) has announced the issuance of a KHR 41 billion (roughly USD 9.96 million) green bond in the first tranche – guaranteed by the Credit Guarantee and Investment Facility (CGIF), a trust fund of the Asian Development Bank (ADB) – with another USD 10 million to follow in the second tranche.
According to a press release on the bond issuance, funds raised will support green projects in Cambodia, including a wastewater treatment plant and sustainable infrastructure. These projects are expected to contribute to greenhouse gas emission reductions and to help Cambodia achieve its nationally determined contributions (NDCs).
A disclosure notice published on the Cambodia Securities Exchange (CSX) website on June 26, 2024, announced that the RGPPSEZ public-guaranteed bond has a five-year maturity and a coupon rate of SOFR + 1.5 per cent per annum. The bond is partially redeemable before the maturity date and semi-annually paid (every December and June), with the redemption period starting from the second year (December 2026) after the issuing year, and lasting until the fifth year.
“Cambodia is vulnerable to climate change and needs more investors to invest in sustainable development with a long-term perspective and green bonds offer the opportunity to earn a return on their investment while supporting environmental causes,” remarked H.E. Sou Socheat, Director General of the Securities Exchange Regulator of Cambodia (SERC).
He added:
Issuers benefit from accessing capital for sustainable projects and it also indicates their commitment to contributing to sustainable development.
The issuance is the result of the Cambodia Sustainable Bond Accelerator Program, an initiative built on a partnership between the SERC, Global Green Growth Institute (GGGI) and the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), in collaboration with the CGIF and GuarantCo, which are part of the Private Infrastructure Development Group.
RGPPSEZ was selected by the program last year to receive technical assistance, issuance support, and enhanced investment support, such as in credit enhancement.
“The successful issuance and listing of RGPPSEZ's green bonds exemplify our collective commitment to addressing climate change and advancing sustainable development," said Shomi Kim, Country Representative of GGGI Cambodia.
“This milestone highlights the vital role of innovative financing solutions in mobilising resources for a greener, more resilient future. This has been a great journey to promote sustainable financing through the Sustainable Bond Accelerator Program which is also co-funded by the government of the Grand Duchy of Luxembourg through the Global Trust Fund on Sustainable Finance Instruments (GTF),” added Kim.
Dr. Hamza Ali Malik, Director of Macroeconomic Policy and Financing for Development at ESCAP, further stated:
The Cambodia Sustainable Bond Accelerator Program stands as a testament to how partnership and cooperation can advance the financing of the SDGs and climate action in the region. This initiative, among other sustainable finance efforts supported by ESCAP in Cambodia, is pivotal in creating a sustainable capital market and a supportive financial ecosystem. We are proud of this collaborative achievement, which sets the stage for a sustainable and prosperous Cambodian economy.
Hongwei Wang, Chief Executive Officer of CGIF, stated, “CGIF is proud to guarantee Royal Group Phnom Penh SEZ’s first bond issuance. This initiative not only signifies a major milestone for RGPPSP but also sets a precedent for sustainable development in Cambodia… This bond sets a new standard for other issuers in Cambodia, demonstrating the viability and the benefits of green financing.”
Nishant Kumar, Managing Director, Asia, at GuarantCo said, “We are delighted to be part of the Cambodia Sustainable Bond Accelerator Program, which has been a catalyst for further sustainable finance activity in Cambodia. GuarantCo has been a strong supporter of sustainable finance for infrastructure in the country and across Southeast Asia through our transactions such as with Cellcard (CamGSM). We are glad that this transaction builds on the broader momentum and paves the way for a future where more Cambodian companies can access green and sustainable capital.’’
At the official green bond listing ceremony, which took place at the Cambodia Securities Exchange (CSX) building on 28 June, 2024, Uematsu Hiroshi, CEO of Royal Group Phnom Penh SEZ, said, ‘’This green bond is an important step in our company’s involvement in helping Cambodia achieve its climate target and help address the gap between investors and investment in sustainable development this bond presents a compelling opportunity for investors seeking to align their financial goals with positive environmental impacts.’’
Sustainable, thematic, and green bonds offer Cambodia a three-pronged approach to balancing environmental and economic development. These instruments fund critical projects and also attract investment capital fueled by the global sustainability movement, contributing to the broader development of Cambodia's financial market.
Launched in February 2023 the Cambodia Sustainable Bond Accelerator Program aims to accelerate the development of Cambodia’s green and sustainable bond market and associated policies, tools, and mechanisms to facilitate financing towards climate mitigation and adaptation initiatives.
This press release was supplied.