The Cambodia Securities Exchange (CSX) yesterday announced the official listing of the $10 million bonds of Royal Railway Plc, a subsidiary of Royal Group.
The bond listing ceremony, organised on a train, was attended by Hean Sahib, Secretary of State of the Ministry of Economy and Finance (MEF); Hong Sokhour, CEO of CSX; Seang Thirith, Deputy Director General of Securities and Exchange Regulator of Cambodia (SERC); Kith Meng, Chairman of Royal Group of Companies; and around 50 guests.
Sahib, who is also CSX’s chairman, said Royal Railway is the eighth issuer of corporate bonds on the stock exchange to raise $10 million from institutional and individual investors. The fund will be used to develop the railway infrastructure for providing transportation of goods in Cambodia.
“Today’s achievement will be a model for other enterprises that have the intention but are reluctant to enter the stock exchange,” said Sahib, adding that the government waives 50 percent of income tax for issuers for the first three months along with a tax debt relief.
Sokhour said stock investors traded more than 266 shares per day in the third quarter of this year, an increase of 138 percent compared with trading of 154 shares daily for the same period last year.
The trading volume was over $0.65 million on average per day, an increase of 197 percent from more than $0.43 million for the same period a year ago. The number of trading accounts also surged to 35,000.
“Today marks a new historic moment and probably it is the first event in the world as the official bond listing ceremony was organised on a running train. Our intention was to do something new and exciting,” Sokhour said, adding that the 410,000 Royal Railway bonds were issued with a seven percent coupon rate per annum for a 10-year maturity.
“The number of corporate bonds is expected to rise gradually as it is a low-cost and long-term source of funding with tax incentives provided by the government along with good reception from investment and business communities,” he said.
Meng said Royal Railway has invested over $100 million and developed the railway to its current condition since it started operating again in 2010.
It operates passenger and freight trains seven days a week on both lines between Phnom Penh and Poi Pet and Sihanoukville.
It also runs container, fuel, cement, rock trains and passenger trains to Sihanoukville and Battambang.
“Railway is one of my goals to achieve transport services to assist with the country’s growth. Today is another step in the right direction,” Meng said, adding that the freight carried has increased 34 percent from 2017 to 2021.
Royal Railway also plans to raise $10 million later this year, Meng said, adding that the funds raised from the sale of bonds will be utilised to bring more than 130 wagons. Currently, the firm has employed 762 permanent staff excluding freelancers.
“This will give this country and the people reliable and safe economic services to assist economic growth. This bond will be used to upgrade railways lines, wagons and locomotives plus new equipment that further modernise the railway services,” he said.
Kim Sophanita, director of CSX’s market operations department, told Khmer Times that the Royal Railway bond is very attractive for investors as the seven percent coupon rate is high and unsecured and unsubordinated, which means the bond was issued without the necessity of having guarantee and the bondholders are prioritised for debt payment.
“That’s why the firm has not faced any difficulty to sell its bonds as the bonds are attractive [with high coupon rate] and the business is strategic to support the transportation sector and the economy with low-cost transportation through railway, which is the benefits for businesses and it is a type of business without competition,” Sophanita said, adding that potential investors have booked the bonds even before the subscription stage.
Meanwhile, the trading volume at CSX is expected to rise to more than $0.6 million this year from $0.27 million and $0.11 million in 2021 and 2020, respectively.
“Actually, we are growing very fast, but if compared with other countries, we are very far behind. However, we are running faster and faster with participation from all stakeholders. The presence of Royal Group’s businesses has impressed investors remarkably in the last few years,” said Sokhour.
This article was first published in Khmer Times. All contents and images are copyright to their respective owners and sources.
