December 15, 2023
PHNOM PENH – The government plans to issue a $100 million sovereign bond in 2024. The move aims to raise additional funds through the capital market to support public investment projects, while also repaying the principal and interest of previous issuances.
According to the Financial Management Law (FML) 2024, endorsed by King Norodom Sihamoni on December 11, the government is authorised to issue bonds totalling 440 billion riel (roughly $100 million). The funds are intended to repay portions of the 2022 bond issuance.
“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,” the FML stated.
Since 2022, the government, through the Ministry of Economy and Finance, has begun issuing sovereign bonds, selecting the National Bank of Cambodia Platform (NBCP) as an issuance agent. The ministry is also collaborating with the Cambodia Securities Exchange (CSX) to appoint the entity as another issuance broker.
Meas Soksensan, secretary of state at the finance ministry, said previously that the government issued bond offerings of $200 million in 2023 and $300 million in 2022. He emphasised that these amounts align with the limits set by the annual FML laws for their respective years.
Soksensan explained that, initially, 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) and similar organisations.
“Other investors, including the public, will soon be able to invest in sovereign securities on the secondary market, a development the [ministry] is eagerly anticipating,” he added.
Hong Sok Hour, CEO of CSX, said the ministry has appointed two institutions – CSX and the National Bank of Cambodia (NBC) – as issuing agents for bonds to gather funds for public investments.
“We will assist the central bank in executing the government’s plans,” he stated.
The debt securities will be issued with a par value of one million riel ($243.31) and include semi-annual coupon payments, according to a ministry statement.
Recent data from the authority reveals the Kingdom had a total outstanding debt stock of $10.72 billion by the end of Q3 2023. This comprises approximately 99.5%, or about $10.67 billion, in public external debt – 64% from bilateral development partners (DPs) and 36% from multilateral DPs – and 0.5%, or around $51.99 million, in public domestic debt.
The government repaid debt services totalling $190.2 million in Q3 2023. From Q1-Q3 2023, the government repaid a total of $437.56 million in debt. This includes roughly $426.68 million for public external debt and around $10.88 million for public domestic debt, as per the ministry.