Cambodia's second corporate bond issued by microfinance firm LOLC (Cambodia) Plc officially listed in the Cambodia Securities Exchange (CSX) on Friday, after it was completely purchased by institutional investors when the subscription period ended on April 26.
LOLC issued two types of bonds – namely FX-indexed bonds and fixed-coupon bonds – and successfully raised 80 billion riel ($20 million) for the growth of its lending business.
Underwritten by Yuanta Securities, the bonds were subscribed with an interest rate of eight per cent per annum for FX-indexed bonds and nine per cent per annum for fixed-coupon bonds with a maturity date of three years. A total of 800,000 bonds were issued, valued at 100,000 riel per unit.
Yuanta Securities’s research head Sim Dara said on Thursday that demand for both types of bonds were greater than the offering, resulting in an oversubscription.
“There were actually investors who came later after we had already closed the books,” he said.
According to Dara, the investors that purchased the bonds were institutional investors, mostly foreign-owned local banks.
He added that while the bonds will be available for trading on the CSX, active trading like stocks is not expected, as corporate bonds are in general less liquid compared to sovereign bonds.
“Since investors are mainly long-term institutional investors with big investment size, transactions may rarely happen,” he said.
CSX Market Operations Department director Sophanita Kim on Thursday said the second bond listing will provide more confidence to companies who are considering raising funds through the capital market.
While companies have been hesitant to enter the new market, and waiting and observing others, Sophanita said the success of the second bond issuance and many IPOs will help provide a boost of confidence for other firms.
“Many companies – especially financial institutions – are now trying to issue bonds in the capital market to enjoy the tax incentives granted by the government. I recommend other companies who haven’t thought of it to do it now and grasp these huge advantages,” she said.
“For long-term growth, they should consider issuing equity other than debt.”