Having recently obtained authorization from the Cambodia Securities Exchange Commission (SECC), Prasac Microfinance Institution Ltd is poised to become the fourth company to issue bonds on the Cambodia Securities Exchange (CSX).
To discuss the show and the company’s performance last year, May Post’s Kun Kunakakara spoke with Prasac vice president Say Sony.
When did Prasac request authorization to issue bonds on the CSX?
Sony: First, let me explain the show. We plan to raise 280 billion riels ($ 70 million) to support our local currency lending activities, particularly in the small and medium-sized enterprise (SME) sector.
The idea of issuing bonds on CSX was conceived in mid-2018, and we started working on it in early 2019. We recently obtained approval from the market regulator, so we plan to start issuing this month- this.
We have already signed enough investors to reach our goal and we are entering into agreements with other investors. This type of trust is possible thanks to the 100% bond buyback guarantee from the Guarantee and Investment Facility (CGIF) as well as our excellent performance.
Why did you choose to issue bonds instead of entering the securities market?
Sony: Corporate bonds are a new market in the Kingdom. This market will allow Prasac to widen and diversify its sources of financing. Compared to other sources, bond issuance is safer and a cheaper way to raise funds.
We hope that our program will help promote the local bond market and attract more local and international investors. We expect banks and other financial institutions, as well as insurance and asset management companies, to invest.
How will you use the money raised?
Sony: Prasac intends to use the funds to support our lending activities in Cambodian riel. The proceeds from the bond issue will support micro, small and medium-sized rural enterprises (MSMEs), including women entrepreneurs in Cambodia. Most of the proceeds will go to improving access to credit for MSMEs owned by women.
The show also aims to promote the use of local currency in accordance with the policy of the National Bank of Cambodia.
When do you expect registration to take place and how many bonds will be issued?
Sony: We anticipate listing will take place this month, although it may be delayed until the second quarter of the year. We will issue 2.8 million bonds to raise 280 billion riels.
We have done market research and have a clear idea of who will be interested in the bonds. They will be issued exclusively in riel and will present an attractive investment thanks to the 100% bond buyback guarantee from CGIF.
Another reason why bonds are attractive is the excellent performance of Prasac. Our loan portfolio increased by 6.5% last year, from $ 2.5 billion to $ 2.6 billion. Deposits increased 3.4% from $ 742 million to $ 758 million.
We employ 9,339 people in 180 branches across the country.