Cambodia Investment Review
The Credit Guarantee Corporation of Cambodia (CGCC)Â has been recognized with a khAAA rating by the Rating Agency of Cambodia (RAC). This accreditation, recognized by the Securities and Exchange Regulator of Cambodia (SERC), signifies CGCCâs âExtremely strong capacity to meet financial commitments,â backed by the potential support of the Royal Government of Cambodia.
This rating marks a new moment for CGCC, recently accredited as Cambodiaâs inaugural Bond guarantee institution by SERC. The move is strategically aimed at propelling the bond marketâs growth, infusing it with newfound confidence. Following its accreditation, CGCC sought a credit rating from RAC and was subsequently honored with a khAAA rating and a stable outlook. This development is set to elevate the stature of corporate bonds under CGCCâs guarantee, instilling enhanced confidence among bond investors, encompassing financial institutions and insurance companies.
CGCC A Linchpin In Developing Cambodiaâs Bond Market
H.E. Sou Socheat, the Director General of SERC, hailed this achievement, recognizing CGCC as a linchpin in Cambodiaâs bond market. âCGCCâs rating underscores the firmâs robustness and ignites a culture of rating that fosters public trust. It also underscores the companyâs dedication and proactive engagement in our bond market,â he remarked.
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Mr. Wong Keet Loong, CGCCâs Chief Executive Officer, expressed his gratitude for this recognition. âReceiving the khAAA rating from RAC is a testament to our financial strength, enabling us to support larger SMEs in sourcing funds through bonds to expand their ventures. CGCC remains committed to bolstering economic development and fortifying trust and confidence among our partners,â he stated.
Under the guidance of the Ministry of Economy and Finance, CGCC has crafted a âPolicy Framework on Bond Guarantee.â This framework received the highest endorsement from the Deputy Prime Minister, Minister of Economy and Finance, on May 17, 2023. In a subsequent move on August 22, 2023, SERC accredited CGCC as a bond issuance guarantor, a strategic initiative to bolster local firms in fundraising and nurturing the securities sector in Cambodia.
CGCCâs bond issuance guarantee service is poised to invigorate local company issuances, magnetize investors to corporate bonds, enhance the liquidity of the Khmer Riel, and uplift corporate bondsâ credit ratings. CGCC stands as Cambodiaâs sole credit guarantee corporation, established under the auspices of Hun Sen and operating with the technical and financial support of the Ministry of Economy and Finance. Its core mission is to extend credit guarantees, fostering financial inclusion and catalyzing the growth of SMEs across Cambodia.
KhAAA â A Cambodian-Specific Credit Rating
The authorization of RAC by SERC in 2022, a collaboration between the Royal Group and 3E:Fii Capital, marked a significant stride in developing Cambodiaâs capital markets. Credit ratings, symbolized by codes like AAA, BB, and CC, reflect the creditworthiness of corporate or government bonds, with higher ratings typically attracting lower interest rates due to perceived lower risks.
With the operationalization of RAC, Cambodian entities can now obtain a nation-specific credit rating, such as âkhAAAâ or âkhBB,â essential for all listings on Cambodiaâs Securities Exchange. This move dovetails with the regulatorâs plan to introduce a dual âKhmerâ and âGlobalâ rating system, positioning Cambodiaâs sovereign rating at AAA within the local category.
As Cambodia steps into this new era of financial sophistication, CGCCâs khAAA rating not only represents a landmark achievement but also heralds a new chapter of confidence and growth for the nationâs burgeoning bond market.
Credit to: Cambodia Investment Review, Published on 23 January 2024