The Securities and Exchange Regulator of Cambodia (SERC) and the Credit Guarantee Corporation of Cambodia (CGCC) signed a Memorandum of Understanding (MOU) on August 30, 2024, on "Collaboration in Promoting the Development and Issuance of Guaranteed Bonds" at the Non-Bank Financial Services Authority (FSA) Building.
The MOU was signed by H.E. Sou Socheat, Director General of the SERC, and Wong Keet Loong, Chief Executive Officer of CGCC, under the presidency of H.E. Ros Seilava, Secretary of State of the Ministry of Economy and Finance (MEF) and Chairman of the CGCC, as well as Vice Chairman of the Board of the FSA.
SERC and CGCC stated that the signing ceremony was organised to promote the development of the securities sector and the issuance of guaranteed bonds by supporting companies and financial institutions in obtaining additional capital through bond issuance.
This includes green bonds, social bonds, sustainability-linked bonds, and sustainability bonds, which are supported and guaranteed for repayment in case of default by a local guarantor, thereby enhancing local capital mobilisation more effectively.
"Through today's MOU, we aim to attract more companies, including SMEs, to seek financing through the securities market,” said H.E. Sou Socheat. “This will also provide additional benefits for listed companies that require further financing sources in the form of bond issuance or other types of debt, with opportunities to obtain guarantees at special rates.”
Socheat emphasised that there are currently 12 bond-issuing companies in Cambodia, most of which issue guaranteed bonds.
“In the current economic situation we are facing, the issuance of guaranteed bonds is a necessity; it is a crucial tool to [mitigate] risk,” he said.
By the end of 2024, two more bonds (green and sustainable bonds) are expected to be issued on the Cambodia Securities Exchange (CSX), he added. These bonds will be issued in cooperation with the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) and the Global Green Growth Institute (GGGI) – two development partners working on sustainable finance in Cambodia.
In June 2024, the Cambodia Sustainable Bond Accelerator (CSBA) Program selected three private-sector bond issuers to receive support for their inaugural green, social, and sustainability bond issuances in 2024, including ScheneiTech (an energy company) and two financial companies – LOLC Plc and Wing Bank.
The CEO of the CGCC also emphasised that his company, as the first and only bond guarantee institution in Cambodia, will continue to play a key role in the growth of Cambodia’s bond market.
“The credit rating of CGCC at khAAA will enhance the credit rating of issuers, thus giving added confidence to bond investors,” said Wong Keet Loong. “This MOU with the SERC is strategic for developing and enhancing the securities framework to promote higher bond issuance, to raise funding and attract more domestic and foreign investors.”
According to Loong, the CGCC aims to provide bond guarantees of up to USD 300 million by 2030. In August 2024, the CGCC entered into an MOU with GuarantCo, under which GuarantCo will provide technical support and help to combine resources to enhance CGCC’s bond guarantee capacity.
Loong added that GuarantCo will also provide CGCC with a SME and corporate facility worth about USD 50 million to increase guarantee capacity.
H.E. Ros Seilava further stated, “This MOU will enable both parties to achieve a shared goal of mutually supporting the SERC in the development of the bond market and ensuring that CGCC becomes the leading bond guarantee institution in Cambodia, thereby improving financial inclusion and supporting the growth of SMEs.”
"At the same time, this cooperation will positively impact the bond market in Cambodia by encouraging the issuance and investment of more bonds, including green bonds, social bonds, and sustainable bonds,” he added.
The event also included a workshop on the "Benefits and Opportunities of Issuing Guaranteed Bonds in Cambodia" to raise awareness and disseminate the requirements for obtaining guarantees for bonds. Speakers included representatives from the SERC, CGCC, bond-issuing company Telcotech, Royal Group Securities (RGS), and Prudential (Cambodia).
CGCC is a state-owned enterprise established in 2020 that operates under the MEF. CGCC provides guarantees on KHR-denominated bonds listed on the CSX to support local companies in raising funds and developing Cambodia’s bond market.
Additionally, the CGCC provides credit guarantees to improve financial inclusion and support the growth of SMEs in Cambodia, including the Rice Export Guarantee Scheme (REGS), Women Entrepreneurs Guarantee Scheme (WEGS), and the Business Recovery Guarantee Scheme (BRGS).
B2B Cambodia will publish a follow-up article on Guaranteed Bonds in Cambodia from this event.