Prasac’s Say Sony on bond issuance at CSX
Having recently obtained permission from the Securities Exchange Commission of Cambodia (SECC), Prasac Microfinance Institution Ltd is on its way to becoming only the fourth company to issue bonds in the Cambodia Securities Exchange (CSX).
To discuss the issuance as well as the company’s performance last year, The Post’s May Kunmakara spoke with Prasac vice-president Say Sony.
When did Prasac apply for permission to issue bonds at CSX?
Sony: First, let me explain about the issuance. We plan to raise 280 billion riel ($70 million) to support our lending activities in the local currency, particularly in the small- and medium-sized enterprise (SME) sector.
The idea to issue bonds at 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 expect to begin the issuance this month.
We have already signed enough investors to meet our target, and we are closing deals with other investors. This kind of trust is possible because of the 100 per cent bond buyback guarantee from the Credit Guarantee and Investment Facility (CGIF) as well as our excellent performance.
Why did you choose to issue bonds instead of listing on the securities market?
Sony: Corporate bonds are a new market in the Kingdom. This market will help Prasac expand and diversify its sources of funding. Compared to other sources, issuing bonds is more secure and a cheaper way of raising funds.
We hope our issuance 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 firms and asset management companies, to invest.
How will you use the money raised?
Sony: Prasac intends to use the funds to support our lending business in Cambodian riel. The proceeds from the bond issuance will support rural micro, small- and medium-sized enterprises (MSME), including women entrepreneurs in Cambodia. Most of the proceeds will go towards enhancing access to credit for women-owned MSMEs.
The issuance also aims to promote the use of the local currency in line with the National Bank of Cambodia’s policy.
When do you expect the listing to take place and how many bonds will be issued?
Sony: We expect the listing to take place this month although it could be delayed until the second quarter of the year. We will issue 2.8 million bonds to raise 280 billion riel.
We have conducted market research and have a clear idea of who will be interested in the bonds. They will be issued exclusively in riel and present an attractive investment because of the 100 per cent bond buyback guarantee from CGIF.
Another reason the bonds are attractive is Prasac’s excellent performance. Our loan portfolio grew by 6.5 per cent last year – from $2.5 billion to $2.6 billion. Deposits grew by 3.4 per cent, from $742 million to $758 million.
We employ 9,339 people in 180 branches around the country.