According to a Financial Management Law (FML) 2024, which was endorsed by King Norodom Sihamoni in December 2023, the Cambodian government will be able to issue bonds up to the value of approximately USD $100 million (440 billion riel) in 2024.
Sovereign bonds are a debt security issued by a national government to raise money for financing government programs and the intention will be to raise funds through the capital market with a focus on supporting Cambodian public investment projects, as well as repaying the principal and interest of previous issuances.
There are currently large-scale investment projects under development and in the pipeline including key infrastructure projects in the Kingdom.
The FML states, “The funds raised through the capital market will finance investment projects that can generate direct and rapid revenue. This ensures the sustainability of public investment and the efficient management of public debt and the national budget.”
Meas Soksensan, secretary of state at the finance ministry said that until now, sovereign securities could only be purchased in the primary market by entities such as banking and financial institutions, securities and insurance companies, the National Social Security Fund (NSSF) or similar approved organisations.
By allowing for the release of these bonds in 2024, members of the public have the opportunity to invest in sovereign securities on the secondary market.
Cambodia Public Bonds
Initially reported several years ago that the government would be issuing bonds by 2022, the Ministry of Economy and Finance started issuing sovereign bonds via the National Bank of Cambodia Platform (NBCP) as an issuance agent while the Cambodia Securities Exchange (CSX) is also assisting as another issuance broker – these are the only two approved issuing agents for bonds.
To date, Cambodian government bond offerings, limited by the annual FML laws, have totalled
- USD $300 million in 2022
- USD $200 million in 2023
- USD $100 million (planned for 2024)
A statement added that the new debt securities will be issued with a par value of one million riel (USD $243.31) and will also include semi-annual coupon payments.
This is intended to provide investors with a steady income stream, hence making sovereign bonds an attractive investment option.
What Is Cambodia’s Debt
The Kingdom had a total outstanding debt stock of USD $10.72 billion by the end of Q3 2023.
- 99.5 per cent (approximately USD $10.67 billion) in public external debt – 64% from bilateral development partners (DPs) and 36% from multilateral DPs
- 0.5 per cent (USD $51.99 million) in public domestic debt.
Between Q1-Q3 2023, the government has repaid a total of USD $437.56 million in debt including $426.68 million for public external debt and $10.88 million for public domestic debt.
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