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Cambodia’s private placement bonds will undergo full vetting process for guarantee: ADB

Cambodia Bonds – The Credit Guarantee and Investment Facility (CGIF) has assured investors that all private placement bonds will be fully vetted by the facility despite no financials of the company being released to the public.

The assurance was made as Cambodia issued its first corporate bond only accessible to qualified investors covered under the facility that provides guarantees on local currency-denominated bonds issued by companies in the region.

The Telcotech bond (CSX:TCT26A) was launched last month and had fully subscribed its KHR 80 billion ($20 million) qualified investor bond in off-market sales. Qualified investors refer to an institutional investor or high net worth investors.

The company operates underwater communication cables and was launched in 2007 as a wholly-owned Cambodian then bought by the Royal Group in 2011 as a fully owned subsidiary.

The corporate bond has an annual coupon rate of 4.5% to be paid out over five years will be settled in US dollars and fully insured by the Credit Guarantee and Investment Facility.

Anuj Awasthi, Vice President of CGIF told Cambodia Investment Review in a webinar discussion that the facility requires full compliance and auditing procedures by all bonds it underwrites regardless of public disclosure or not.

The facility that was established by the Asian Development Bank in 2010 now underwrites three out seven corporate bonds listed on the Cambodia Securities Exchange – RMA Cambodia, PRASAC and now Telcotech.

The facility was designed to promote financial stability and boost long-term investment in the region.

Yuni Lee Heathcote CEO of Telcotech said, at the same webinar, the company went through stringent placement and followed all listed documentation we just didn’t require a public road show and other promotional activities.

We went through the entire process of the CGIF, which has a high level of reputation, required. SBI Royal was fantastic and able to assist us with the highly technical process, she added.

The brokerage firm SBI Roya Securities CEO Seng Chang Thoeun who facilitated the deal was not permitted to disclose who the qualified investors were that purchased the bonds.

Public and quarterly reviewed disclosures have been a common complaint amongst companies looking to list securities on the local exchange.

Currently, the qualified investor initiative is not available for equity listings. However, the regulator and CSX team have been discussing a similar feature project for equities listing.

HE Hong Sok Hour, Chief Executive Officer of CSX told Cambodia Investment Review that companies listed under the qualified investor program however will not receive tax incentives that are currently allowed for publicly available securities.

The exchanges regulator Securities and Exchange Regulator of Cambodia (SERC) will also not require quarterly reviewed disclosures. In addition, the regulator will not release the company’s annual audited reports publicly.

Sok Hour recently told ‘Cambodia Investment Review Leader Talk’ series, that while there are currently he plans to have three or more stocks listed this year and 20 or 30 more in the next five years.

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