Cambodia’s Daun Penh Agrico, a unit of the agricultural arm of Vietnam’s Truong Hai Group Corp ( Thaco ), has raised US$49 million from an eight-year bond issue guaranteed by GuarantCo, part of the Private Infrastructure Development Group ( PIDG ).

Carrying a coupon of 5.25%, the issue is part of a targeted package of US$100 million to fund the expansion of production and processing of bananas, pineapples, and mangoes in Cambodia’s northeast province of Ratanakiri, which borders Vietnam’s Central Highlands.

“The investment is expected to increase export-oriented production capacity,” Guarantco says.

Under a four-year programme launched last year, the Cambodian government is promoting investment in Ratanakiri and the neighbouring provinces of Kratie, Mondulkiri, and Stung Treng, especially in agriculture and tourism. 

Yuanta Securities ( Cambodia ) was sole lead manager for the issue, which was subscribed by Cambodia’s ABA Bank as anchor and first-time investor, with Prudential ( Cambodia ) Life Assurance as second institutional investor.

The deal is Cambodia’s first corporate bond in the agricultural sector, Thaco’s first bond offering outside Vietnam, and Prudential’s third transaction with GuarantCo.

Circular-farming model

Thaco is one of Vietnam’s largest business groups with operations in auto manufacturing, mechanics and supporting industries, real estate, logistics, commerce and services, and agriculture.

Founded in 2019, its agricultural arm – Thaco Agri – aims to become a leading force in Southeast Asia. Its operations are based on a circular-farming model with by-products feeding livestock whose manure fertilizes crops, integrating the cycle from cultivation to sales. In addition to Vietnam, its operations include northeast Cambodian and southern Laos.  

“The agricultural sector continues to contribute to Cambodia’s economic growth, although not to its full potential,” says Nishant Kumar, managing director of Asia investments at GuarantCo and also head of Asia coverage at PIDG.

Kumar expects the deal to “help expand and diversify the agri production and processing sector’s funding base by bringing in institutional investors and building local capacity in Cambodia”. 

Deepening bond market

Han Kyung Tae, chief executive at Yuanta Securities, says the issue “highlights the growing depth of the local bond market and sets an important precedent for future agricultural and guaranteed bond transactions in Cambodia.” 

The local unit of Taiwan’s Yuanta Financial Holdings was also lead manager of Cambodia’s first issue of green infrastructure bonds last year. The 15-year offering by SchneiTech Dynamic also raised US$49 million.

Cambodia Securities Exchange ( CSX ) held a listing ceremony for the new bond issue on January 21. The exchange has so far listed 15 bonds and 12 equities, having raised more than US$700 million since the first company listing in 2012.

According to CSX chief executive Hong Sok Hour, the local securities market last year showed “growth and resilience, despite the domestic and global situation appearing to be challenging”.

CSX is 55% owned by the Cambodian government, with Korea Exchange holding the remaining 45%.