Royal Railway bond raises $24M
TRAIN operator Royal Railway Plc, a subsidiary of a locally-owned conglomerate Royal Group of Companies Ltd, on December 22 listed the second tranche of its bond on the Cambodia Securities Exchange (CSX) to raise an additional $24 million to finance its domestic railway development projects.
Mauritius-based GuarantCo Ltd, a member of the London-headquartered Private Infrastructure Development Group (PIDG), provided a $24 million guarantee “to support a higher credit rating for investors”, Royal Railway affirmed in a statement. The first tranche, listed on October 30, raised 41 billion riel, or about $10 million.
Royal Group and Royal Railways chairman Kith Meng said the funds would be used to develop “this strategically important infrastructure asset” by stepping up capacity, lowering costs and ensuring safer deliveries to better meet the growing logistics needs of Cambodia.
“This bond is my commitment to the growth of the railway, and adding new and better services for the Cambodian people,” he said.
CSX CEO Hong Sok Hour described the new listing as a reflection of confidence from a private company in raising funds from the capital market for business expansion plans.
“We truly congratulate Royal Railway for its decision to raise more funds from the capital market … for the company’s business expansion.
“There are a lot of big companies queuing to list on the bourse next year – that is a very good sign for the development of our capital market,” he said.
Securities and Exchange Regulator of Cambodia (SERC) director-general Sou Socheat confirmed that the proceeds from the listing would be used for the continued development and expansion of the Kingdom’s railways.
“This is the first infrastructure bond to be listed in Cambodia, and it has many features with the potential to be transformational, leading to future infrastructure funding through the domestic capital markets.
“The bond also sets a benchmark, given that it is rated KhAAA by the newly-established Rating Agency of [Cambodia] Plc [RAC],” he said.
Royal Railways identified Prudential (Cambodia) Life Assurance Plc and Manulife (Cambodia) Plc as buyers of its bond, which it revealed would have a floating rate coupon. It also confirmed the RAC rating.
The statement noted that Royal Railway is a whollyowned member of the Royal Group and the exclusive railway operator in Cambodia, adding that it operates container, fuel, cement and rock freight trains, and provides warehousing and customs clearance services.
The company carried more than 835,000 tonnes of freight in the January-November period, and ferried “over 8,000 passengers each month” on its seven-days-a-week services to Sihanoukville and Battambang, it added.