GuarantCo provides Royal Railway Cambodia with a USD 24 million bond guarantee to invest in the national railway system

  • Date written
  • January, 2023

  • First floating-rate 10-year bond subscribed by domestic insurance companies
  • First listed infrastructure bond in Cambodia
  • Rated AAA by the Rating Agency of (Cambodia) Plc

GuarantCo provides Royal Railway Cambodia with a USD 24 million bond guarantee

GuarantCo, part of the Private Infrastructure Development Group (PIDG), has provided a USD 24 million guarantee for an innovative dual tranche bond issued by Royal Railway Cambodia, split equally between 5 years and 10 years. The features of this bond have the potential to be transformational in facilitating future infrastructure funding through domestic capital markets in the country. The bond investors included Prudential (Cambodia) Life Assurance PLC and Manulife (Cambodia) PLC. SBI Royal Securities, a leading securities firm in Cambodia, acted as the sole mandated lead arranger of the bond.

Proceeds of the bond, which is rated AAA by Rating Agency of (Cambodia) Plc, will be utilised to purchase new trains and finance renewal, and upgrades of the country’s railway network. The financing is expected to increase Royal Railway’s capacity and efficiency to cater for the large unmet demand for freight and public services in Cambodia. Given the underdeveloped road network, Royal Railway’s freight services will ensure seamless, efficient and fast movement of goods across Cambodia.

Royal Railway is the exclusive national railway operator in Cambodia which provides the company with a significant market opportunity in transportation and logistics, allowing it to service exports via major national sea and land trade routes.  The company’s strategy aligns with the longer-term Triangular Connectivity strategy of the Government of Cambodia to improve connectivity with neighbouring Laos, Thailand and Vietnam, and facilitate cross-border trade.

The transaction is aligned with Sustainable Development Goal 9.1 and 9.4: Develop sustainable, resilient and inclusive infrastructures and upgrade all industries and infrastructure for sustainability. By enhancing the rail system of Cambodia, the transaction is expected to improve the reliability and efficiency of trade for businesses leading to increased revenues and economic growth. Savings for businesses transporting goods via rail may be as large as 66 percent per km travelled in comparison to moving the same goods via roads. Additionally, businesses may benefit from a reduction in the number of products that are lost due to breakage or spoilage during transportation.

Ultimately, the transaction will allow Royal Railway to unlock rail capacity to support the development of the country’s freight market thereby helping reduce per unit costs. GuarantCo expects the transaction to demonstrate the viability of the rail sector, leading to more industries using the railway and more integrated supply chains which will further enhance the efficiency of the rail network.

Layth Al Falaki, CEO of GuarantCo, said:

“We are very pleased to have closed our second transaction in Cambodia within a few weeks, following the financial close of First Finance, the first social bond in the country.  Our transaction with Royal Railway is significant as it will help deliver sustainable and clean transportation to local people and businesses whilst boosting the economy by making important trade connections.  We hope that both Royal Railway and the First Finance transactions will encourage local financial institutions to fund infrastructure development and further develop the nascent bond markets in Cambodia”. 

Neak Okhna Kith Meng, Chairman of Royal Group and Royal Railway, said:

“This USD 24 million listed bond and its investment into the Royal Railway will progress this strategically important infrastructure asset to support the increasing logistic needs of Cambodia through increased capacity, safer delivery and lower costs. This bond is my commitment for the growth of the railway adding new and better services for the Cambodian people”.

His Excellency Sou Socheat, Director General of Securities and Exchange Regulator of Cambodia (SERC), said:

“This will be the second listed bond by Royal Railway on the Cambodian Securities Exchange which the proceeds will be used to continue the development and expansion of an important infrastructure asset in Cambodia. This bond is the first infrastructure bond to list in Cambodia and has many features that have the potential to be transformational to lead future infrastructure funding through the domestic capital markets in the country. The Bond also sets a benchmark given it is rated Kh-AAA by the newly established Rating Agency of (Cambodia) Plc”.

 May Lin, Chief Financial Officer of Manulife Cambodia, said:

“Manulife Cambodia’s investment in the Royal Railway Bonds is a demonstration of our commitment to working with the government and key market participants to develop the Cambodia Capital Market.  This in turn will improve the access to capital and support critical infrastructure projects such as the Royal Railway.  It is just another example of Manulife’s values in action as we strive to make the Cambodian peoples’ everyday lives easier and better.”

Sanjay Chakrabarty, Chief Executive Officer of Prudential Cambodia, said:

“As one of the largest insurers in Cambodia with over USD 200 million of assets under management, we strive to improve the country’s transportation system and socio-economic development by participating in Cambodia’s financial markets. Our investment in this sustainable and inclusive infrastructure project well aligns with Prudential’s purpose to help people get the most out of life.”

Seng Chan Thoeun, CEO of SBI Royal Securities, said:

“This transaction witnesses the very important role of the capital market in supporting financing for infrastructures such as railway, affordable house, telecom, renewable energy project, hospital, etc. Being the first floating rate bond listed on the exchange, we are having another innovative financing structure to support local corporates. Furthermore, given that Cambodia requires significant investment in infrastructure to sustain its economic growth, SBI Royal Securities will replicate this bond structure to assist the burgeoning of infrastructure sector”.


About GuarantCo

GuarantCo mobilises private sector local currency investment for infrastructure projects and supports the development of financial markets in lower income countries across Africa and Asia. GuarantCo is part of the Private Infrastructure Development Group (PIDG) and is funded by the governments of the United Kingdom, Switzerland, Australia and Sweden, through the PIDG Trust, the Netherlands, through FMO and the PIDG Trust, France through a stand-by facility and Global Affairs Canada through a repayable facility. GuarantCo is rated AA- by Fitch and A1 by Moody’s. GuarantCo’s activities are managed by GuarantCo Management Company which is part of Cardano Development

About PIDG

The Private Infrastructure Development Group (PIDG) is an innovative infrastructure project developer and investor which mobilises private investment in sustainable and inclusive infrastructure in sub-Saharan Africa and south and south-east Asia. PIDG investments promote socio-economic development within a just transition to net zero emissions, combat poverty and contribute to the Sustainable Development Goals (SDGs). PIDG delivers its ambition in line with its values of opportunity, accountability, safety, integrity and impact. Since 2002, PIDG has supported 190 infrastructure projects to financial close which provided an estimated 220 million people with access to new or improved infrastructure. PIDG is funded by the governments of  the United Kingdom, the Netherlands, Switzerland, Australia, Sweden, Germany and the IFC

About Royal Railway Cambodia

Royal Railway PLC is a wholly owned member of the Royal Group. It is the exclusive national railway operator in Cambodia. Royal Railway provides frights services covering Shipping Containers, Fuel, New Car, Cement, and Rock. It also provides custom clarences and warehouse storage. It carried over 835,000 tons of freight for the 11 months of 2022. Passenger trains operate 7 days a week to Sihanoukville and Battambang carting over 8,000 passengers each month. Royal Railway employs over 762 staff.

About Royal Group

Royal Group was established in 1991 and is one of the largest conglomerates in the Kingdom of Cambodia.  Royal Group is the premier investment and development conglomerate in Cambodia. The Group is focused on bringing quality investment to the country and on providing investors with the platform to run successful and profitable operations. Cambodia’s booming economy, one of the fastest growing worldwide, enjoys a stable political situation, together with the most welcoming and liberal business, investment and trade environments in ASEAN.


The Royal Group has been at the heart of this economic development for more than two decades, attracting international investors, frequently through joint ventures, and building market leaders in a cross-section of industries. Moreover, it is recognized as the country’s most dynamic and diversified business conglomerate. The Group maintains interests in a wide range of industries including power, telecommunication, aviation, railway, media, banking & financial services, insurance, resorts, education, property, trading, digital payment, energy, petrochemicals and agriculture