PPCBank’s foreign exchange-indexed bonds became the first corporate bonds listed on the Cambodia Securities Exchange (CSX) to be traded into the secondary market yesterday.
The undisclosed buyer and seller transferred 40,000 units (out of 400,000 in the block) with a par value of 100,000 riels ($25) each selling at a premium of 105,309 riels a unit.
The trade represents a sold at a yield-to-maturity (YTM) of 4.5 percent, down from the initial YTM of 6.5 percent listed in April this year with 867 days left until maturity.
Han Kyung Tae, managing director of Yuanta Securities, the lead manager for the bond issuance, said we are of the view that the 2 percent drop in yield is reflecting a meaningful degree the decline in the overall market interest rates as a consequence of the economic slowdown driven by the global COVID-19 pandemic.
“This is the first event in Cambodia’s capital market history where a securities transaction serves as an indicator of the current economic condition [which is normally the case in more advanced markets],” Han said.
Han added, however, he remains cautious about drawing a hasty conclusion given the fact that the transaction size is relatively insignificant compared with bank lending activities and that it is not the only variable that determines the market rates.
“The transaction also illustrates the importance of the capital market as a place that enhances the efficiency of capital flows where sellers in need of liquidity meet buyers with excess investible assets,” he added.
Jong Weon Ha, chief operating officer at the CSX, said the transfer represents the ever-growing market of the local exchange for both equities and bonds.
“This is a great going, I would say, for our newly launched corporate bond market. In the last two years we have six companies issuing eight corporate bonds listed in our markets and we even have big and retail trades from time to time,” he said.
“Bond markets are not supposed to be as liquid as stocks because its investors mostly are institutional investors who prefer to buy and hold for fixed income but this market is undoubtedly huge. As a market operator, we are keen on providing a variety of financial products and services to facilitate trading activities to our investors,” he added.
Khmer Times also contacted PPCBank who said the transaction was made among subscribers
and referred any questions back to its trader Yuanta Securities.
PPCBank has successfully raised 80 billion riels ($20 million) in corporate bonds from two separate listings this year. Both the first and second phase bonds had a coupon rate
of 6.5 percent per annum with a maturity date of three years.
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