Three firms bag green bond support

Three firms bag green bond support

Three private-sector bond issuers have been selected to receive comprehensive support for their green, social and sustainability bond issuances in 2024 under the inaugural Cambodia Sustainable Bond Accelerator (CSBA) Program.

A recent press release from the Securities and Exchange Regulator of Cambodia (SERC) has confirmed the three companies selected for 2024 issuances under the CSBA program are energy firm Schneitec Dynamic Co., Ltd., along with two financiers, namely LOLC (Cambodia) Plc and Wing (Cambodia) Plc.

Under the latest issuance, CSBA has confirmed a total aggregate investment requirement of $140 million for projects undertaken in 2024 and 2025.

These bond issuances will be used to support investment projects with significant environmental and socioeconomic benefits across Cambodia, according to representatives of the program.

Now entering its second year, the Cambodia Sustainable Bond Accelerator (CSBA) Program is a collaboration between SERC, the South Korean-based Global Green Growth Institute (GGGI), and the United Nation’s Economic and Social Commission for Asia and the Pacific (ESCAP).

The program is also supported by the Credit Guarantee and Investment Facility (CGIF), a fund of the Asian Development Bank (ADB); and GuarantCo, which is part of the London-headquartered Private Infrastructure Development Group (PIDG).

First pioneered by partners in February 2023, the CSBA program aims to accelerate the development of Cambodia’s green and sustainable bond market and associated policies, tools and mechanisms to facilitate financing towards climate mitigation and adaptation initiatives.

Thematic bonds are traditional fixed-income instruments which allow investors to finance specific investment themes such as climate change, health, food, education and access to financial services and target specific Sustainable Development Goals (SDGs) through investing.

The CSBA initiative respects that emerging and frontier market bond issuers often face significant barriers, particularly those issuing thematic bonds including green, social, and sustainability bonds.

Issuers also may experience additional constraints such as low issuer awareness, capacity and heightened issuance costs.

Hence, the CSBA program aims to mitigate these challenges by providing technical assistance, financial support and enhanced investment support to the selected issuers.

Under the latest issuance advice, the Sri Lankan-headquartered microfinance institution, LOLC, is scheduled to issue its sustainability bond in the fourth quarter of 2024.

Through the bonds, LOLC aims to borrow $50 million, $40 million of which will be allocated for social projects and $10 million allocated for green projects.

Wing Bank will issue a $40 million social bond in the fourth quarter of 2024, with the intent to use the funds to provide loans for women entrepreneurs, small and medium enterprises (SMEs) and to support low-income households.

Finally, solar farm operator Schneitec’s $50 million green bond will be issued between quarter four, 2024, and the first quarter of 2025.

The issuance will be used to fund a major solar photovoltaic power plant project by the firm in Cambodia, entitled ‘Project Sunflower.’

SERC’s Director General, Sou Socheat, stressed that the CSBA program supports broader national policy direction, noting that the Royal Government of Cambodia (RGC) has already prioritized climate mitigation and adaptation in its national development strategy requiring an estimated $7.8 billion in total funding, according to the updated Nationally Determined Contribution (NDC).

Hence, Sou confirmed, “Thematic bonds offer a crucial mechanism to bridge this financing gap, mobilizing investments for the public and private sector in green and sustainable initiatives.”

“Also, these bonds will contribute to the greenhouse gas emissions reduction, contribute to the NDC and lead to more green job creation,” he stated.

The CSBA’s first phase allocations in June of 2023 totalled close to $95 million, likewise spread across three companies.

In 2023’s issuance, microfinance deposit-taking institution (MDI), Amret Plc, and publicly-listed industrial park operator, Royal Group Phnom Penh SEZ (PPSP), were offered support to issue $50 million and $20 million worth of sustainability bonds, respectively.

In 2023, the CSBA also supported real estate firm Golden Tree Co., Ltd., to offer a green bond valued at $25 million to support green building development.

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