Frontier Markets Issue: SchneiTec Dynamic’s Cambodian project bond
Green catalyst
Renewable energy and electrical equipment company SchneiTec Dynamic issued Cambodia’s first project bond with the help of the Credit Guarantee and Investment Facility, in a breakthrough deal for the country’s capital markets.
The debut CR196.64bn (then US$49.5m) 15-year green floating-rate bond comprised guaranteed and unguaranteed tranches that catered to investors with different risk profiles.
CGIF, a facility created by the Asian Development Bank with the ASEAN countries plus China, Japan and South Korea, provides guarantees to bonds issued by companies from ASEAN+3 countries with the goal of developing local currency bond markets.
The deal drew on a CGIF guarantee of approximately US$35m for two tranches: a CR60bn tranche paying the 180-day SOFR average plus 180bp and the other CR80bn paying SOFR plus 160bp, but with a 4% floor and 6% ceiling. These were offered alongside a CR56.64bn unguaranteed tranche paying SOFR plus 300bp.
The ceiling and floor on the CR80bn tranche were tailored to insurers to give them protection from interest rate changes.
The bond was Cambodia’s first project bond, setting an example for private capital mobilisation towards sustainable infrastructure, and its largest and longest-tenor bond.
Investors were reassured by the project’s bankability. The proceeds refinance a solar photovoltaic plant with a battery energy storage system that has been in operation since October 2024 and operates under a 20-year power purchase agreement with state-owned Electricite du Cambodge.
This, as well as having part of the trade backed by CGIF, gave investors the confidence to take exposure to the unguaranteed tranche, showing how credit guarantee schemes can act as a catalyst for domestic bond market development. The strong take-up meant that CGIF needed to guarantee a smaller amount of bonds than originally expected.
Distribution was equally split between domestic and foreign investors, something that further fuels local market development. The CGIF aims to engage a broad investor base with its deals and avoid crowding out foreign participation. Insurance companies took 70% of the bonds and banks 30%.
By CGIF’s internal scorecard, SchneiTec’s green issue scores the highest for potential impact on market development. The bonds align with SchneiTec’s green bond framework, which has been verified by S&P to comply with the International Capital Market Association’s green bond principles as well as the ASEAN green bond standards.
Yuanta Securities (Cambodia) was the lead manager and underwriter.
The CGIF aims to act as a catalyst in Asian local currency bond markets, and SchneiTec’s deal has set a benchmark for future issuance in the region.
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