State-run CGCC graded khAAA, making way for bond market expansion

The state-owned Credit Guarantee Corporation of Cambodia (CGCC) has been rated khAAA by the Rating Agency of Cambodia (RAC), after its accreditation by the Securities and Exchange Regulator of Cambodia (SERC), making it the first debt securities guarantee institution in the country, enabling it to support local companies in issuing bonds.

The initiative aims to increase the liquidity of the Khmer riel through the issuance of financial instruments and enhance the credit rating of corporate bonds.

The move is part of a broader strategy to stimulate the sector’s development by fostering greater market confidence.

Wong Keet Loong, CEO of CGCC, said the khAAA rating enables them to assist small and medium-sized enterprises (SMEs) in need of additional funds through debt securities issuance in the capital market.

“The rating demonstrates the CGCC’s financial capacity to assist larger SMEs capable of issuing bonds to secure funding for their business expansion. CGCC remains instrumental in fostering economic development and in strengthening the trust and confidence of our partners,” he said.

SERC director-general Sou Socheat confirmed that the corporation’s rating allows it to aid other companies in issuing bonds on the Cambodia Securities Exchange (CSX).

“CGCC is a guarantor in the Cambodian bond market and its rating indicates the company’s soundness. Moreover, CGCC’s rating starts the culture of rating in the market, building public confidence and showcasing the company’s commitment and willingness to actively engage in our bond market,” he explained.

The corporation formulated a policy framework on bond guarantee and received endorsement from the Ministry of Economy and Finance on May 17, 2023.

On August 22, SERC accredited CGCC as a bond issuance guarantor, supporting local companies and aiding the growth of the Kingdom’s securities sector.

Established under sub-decree No 140/ANKR/BK on September 1, 2020, the corporation launched its $200 million Business Recovery Guarantee Scheme (BRGS) on March 29, 2021 in a bid to broaden access to formal loans from participating financial institutions (PFIs) for working capital, investment and business expansion purposes, according to CGCC.

As of December 22, the corporation’s outstanding loans amounted to $113.96 million, with a non-performing loan (NPL) ratio of 5.41. Total claim payouts stood at $123,336.

The corporation has supported 1,731 micro, small and medium enterprises (MSMEs) along with 149 larger firms, as per CGCC.

Credit to: The Phnom Penh Post, Published on 22 January 2024