The finance ministry is set to issue sovereign bonds “within the next one or two months” on the recently-established Government Securities Auction Platform (GSAP), which was developed by the Cambodia Securities Exchange (CSX) and is the second of its kind after the central bank’s “National Bank of Cambodia Auction Platform” (NBCP).
This is according to CSX CEO Hong Sok Hour, who told The Post on June 29 that his team is working with the Ministry of Economy and Finance to ensure that the government can, in the near future, successfully issue sovereign bonds on the GSAP, in addition to the NBCP – where these debt instruments were first issued last September.
He noted that the ministry had appointed two institutions – the CSX and National Bank of Cambodia (NBC) – as issuing agents for sovereign bonds to “maximise investment”.
“We expect to begin offering government [sovereign] bonds in the next one or two months,” he said. “By participating in these issuances, we’ll assist the national bank in fulfilling the government’s plans.”
In mid-January, the finance ministry unveiled plans to sell an 813 billion riel ($200 million) sovereign bond this year, issued in several tranches.
The NBC and CSX were selected as issuing agencies for the debt security, which is to be issued with a par value of one million riel and semi-annual coupon payments, the ministry said in a statement.
The statement said the bond would 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 at the time that the new $200 million offering is independent of last year’s $300 million sovereign bond, hinting that subsequent tranches of the latter would still be issued.
He noted that these amounts correspond to the limits prescribed by the annual laws on Financial Management for their respective year.
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 (NSSF) 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 the capital market where companies directly issue securities to investors. The “secondary market” is the segment where investors trade the securities purchased on the primary market with each other, rather than with the issuing entity.
The CSX is co-owned by the Ministry of Economy and Finance and the Korea Exchange (KRX) on a 55:45 basis.