Cambodia Investment Review

CGCC Receives Premier khAAA Rating, Spearheading Bond Market Confidence in Cambodia

CGCC Receives Premier khAAA Rating, Spearheading Bond Market Confidence in Cambodia

Pat Olszewski

The Credit Guarantee Corporation of Cambodia (CGCC) has been recognized with a khAAA rating by the Rating Agency of Cambodia (RAC). This accreditation, recognized by the Securities and Exchange Regulator of Cambodia (SERC), signifies CGCC’s “Extremely strong capacity to meet financial commitments,” backed by the potential support of the Royal Government of Cambodia.

This rating marks a new moment for CGCC, recently accredited as Cambodia’s inaugural Bond guarantee institution by SERC. The move is strategically aimed at propelling the bond market’s growth, infusing it with newfound confidence. Following its accreditation, CGCC sought a credit rating from RAC and was subsequently honored with a khAAA rating and a stable outlook. This development is set to elevate the stature of corporate bonds under CGCC’s guarantee, instilling enhanced confidence among bond investors, encompassing financial institutions and insurance companies.

CGCC A Linchpin In Developing Cambodia’s Bond Market

H.E. Sou Socheat, the Director General of SERC, hailed this achievement, recognizing CGCC as a linchpin in Cambodia’s bond market. “CGCC’s rating underscores the firm’s robustness and ignites a culture of rating that fosters public trust. It also underscores the company’s dedication and proactive engagement in our bond market,” he remarked.

Read more: Credit Guarantee Corporation of Cambodia Partners with Cambodia Chamber of Commerce to Hit Aim of $100M in Loans for 2023

Mr. Wong Keet Loong, CGCC’s Chief Executive Officer, expressed his gratitude for this recognition. “Receiving the khAAA rating from RAC is a testament to our financial strength, enabling us to support larger SMEs in sourcing funds through bonds to expand their ventures. CGCC remains committed to bolstering economic development and fortifying trust and confidence among our partners,” he stated.

Under the guidance of the Ministry of Economy and Finance, CGCC has crafted a “Policy Framework on Bond Guarantee.” This framework received the highest endorsement from the Deputy Prime Minister, Minister of Economy and Finance, on May 17, 2023. In a subsequent move on August 22, 2023, SERC accredited CGCC as a bond issuance guarantor, a strategic initiative to bolster local firms in fundraising and nurturing the securities sector in Cambodia.

CGCC’s bond issuance guarantee service is poised to invigorate local company issuances, magnetize investors to corporate bonds, enhance the liquidity of the Khmer Riel, and uplift corporate bonds’ credit ratings. CGCC stands as Cambodia’s sole credit guarantee corporation, established under the auspices of Hun Sen and operating with the technical and financial support of the Ministry of Economy and Finance. Its core mission is to extend credit guarantees, fostering financial inclusion and catalyzing the growth of SMEs across Cambodia.

KhAAA – A Cambodian-Specific Credit Rating

The authorization of RAC by SERC in 2022, a collaboration between the Royal Group and 3E:Fii Capital, marked a significant stride in developing Cambodia’s capital markets. Credit ratings, symbolized by codes like AAA, BB, and CC, reflect the creditworthiness of corporate or government bonds, with higher ratings typically attracting lower interest rates due to perceived lower risks.

With the operationalization of RAC, Cambodian entities can now obtain a nation-specific credit rating, such as ‘khAAA’ or ‘khBB,’ essential for all listings on Cambodia’s Securities Exchange. This move dovetails with the regulator’s plan to introduce a dual ‘Khmer’ and ‘Global’ rating system, positioning Cambodia’s sovereign rating at AAA within the local category.

As Cambodia steps into this new era of financial sophistication, CGCC’s khAAA rating not only represents a landmark achievement but also heralds a new chapter of confidence and growth for the nation’s burgeoning bond market.

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