Bourse preparing for launch of sovereign bond auction system
The Cambodia Securities Exchange (CSX) is busy readying the internal systems and mechanisms of a secondary auction platform for sovereign bonds, as an alternative for the National Bank of Cambodia Auction Platform (NBCP), according to the local bourse’s CEO Hong Sok Hour.
The Ministry of Economy and Finance revealed in January 17 that it plans to issue sovereign bonds this year to the tune of 813 billion riel, equivalent to $200 million. The government, through the finance ministry, has appointed the National Bank of Cambodia (NBC) and CSX as issuing agents for sovereign bonds.
Speaking to The Post on March 19, Sok Hour commented that the Cambodian sovereign-bond market is new, and that it would take time for investors and other parties involved to become familiar with each other and how different actors operate.
Fortunately, year-to-date issuances seem to have shown better results than last year’s, fuelling expectations that 2023 will be the overall superior year for the market, he said.
However, Sok Hour expressed concern that global issues this year on the whole could be more volatile than in 2022, with considerable uncertainty stemming from Covid-19, the Ukraine conflict, and US economic woes.
“So, all we can do is meet, discuss and accept stakeholder feedback – especially investors’ – as well as their expectations for the securities.
“We at the CSX are toiling away on our working systems and mechanisms, as well as meeting with key investors, as we join the government and the National Bank of Cambodia in sovereign bond issuances and add another platform.
“If the economic and financial situations in Cambodia and the world do not significantly deteriorate from the current circumstances, we expect to be able to issue the about $200 million worth of sovereign bonds, as planned by the Royal Government. Hence, we all have to do our share to realise this goal,” he said.
On January 18, finance ministry spokesman Meas Soksensan had told The Post that the caps on the volume of sovereign bonds that can be issued each year are prescribed in the annual laws on Financial Management.
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 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 capital market where companies directly issue securities to investors. The “secondary market” is the segment where investors trade the securities bought on the primary market with each other, rather than with the issuing entity.