Corporate M&A
Written By VLP Law Office

VLP Legal Press #8

Infrastructure Bond

What is a bond?

A bond is a financial instrument through which an issuer borrows money from investors and agrees to repay it after a set period. In return for lending their money, investors receive regular interest payments known as coupons. These coupon payments are typically made semiannually and represent the “thank-you” for the loan.

To put it simply, it is like a formal promise from a company or government. They ask people to lend them money, and in return, they promise to pay it back later at specific time along with periodic coupon payments as compensation. Unlike a traditional loan, a bond traded in financial markets allows many investors to buy and sell it over time.

 

What is an infrastructure bond? And why do we want to talk about it?

An infrastructure bond (with the additional word “infrastructure”) is a type of bond used specifically to finance or refinance infrastructure-related projects. Infrastructure assets eligible for the purpose of infrastructure bond issuance under Prakas No. 046 on Infrastructure Bond Issuance dated 30 May 2025 (Prakas No. 046) include those in the following sectors: (1) transportation, (2) renewable energy generation, (3) non-renewable energy generation, (4) energy storage, transmission and distribution, (5) energy generation and processing, (6) general energy infrastructure, (7) social infrastructure, (8) telecommunication, (9) water, (10) waste, (11) environmental infrastructure, (12) other qualifying infrastructure assets.

As developing countries, like Cambodia, gear up for rapid growth, infrastructure becomes the foundation — roads, bridges, energy, water systems, and digital networks. These projects demand massive funding, often beyond what government or corporate budgets. That’s where infrastructure bonds come in to raise the required funding .

 

Who can issue the infrastructure bond?

  • Public limited companies engaged in infrastructure development.

  • Special Purpose Vehicles (SPVs) established as a representative or to raise funds for specific infrastructure projects.

  • Other permitted entities under Cambodian regulations such as  government agencies and state-owned enterprises.

These issuers must seek approval from the Securities and Exchange Regulator of Cambodia (SERC) and meet the eligibility criteria under relevant regulations.

 

Who can buy the infrastructure bond?

  • The general public through public issuance via Cambodia Securities Exchange (CSX).

  • Qualified investors, such as institutional investors (such as insurance companies, pension funds, commercial banks, and investment funds or individuals with substantial financial knowledge and assets).

  • Private buyers through private placements.

 

How many types of infrastructure bond?

Under Prakas No. 046 , there are three types:

Corporate Infrastructure Bonds

  • issued by public limited companies

  • may be offered via public offering, private placement or to qualified investors.

Infrastructure Project Bonds

  • issued by SPVs.

  • may be offered via public offering or to qualified investors.

Infrastructure Securitization Bonds

  • issued by SPVs created by infrastructure companies by pooling together future cash flows, future incomes or other financial assets to create a bond.

  • issuance of infrastructure securitization bond is regulated by a separate regulation.

 

What are the advantages for the issuers and the buyers?

For Issuers

  • Access to long-term financing for infrastructure development.

  • Flexibility to structure funding according to project needs but subject always to the funding purpose provided under Prakas 046.

  • Enhanced reputation through regulatory compliance and transparency.

 

For Buyers (Investors)

  • Opportunity to invest in essential and large-scale infrastructure projects.

  • Potential for steady income from interest payments.

 

What is the process of issuing and buying bonds?

For Issuers

  • Prepare and submit an application to SERC, including:

    • Application Form

    • Disclosure Document (detailing project, use of funds, allocation, and implementation plans)

    • Supporting documents

  • Obtain approval under the relevant Prakas depending on whether it's for public, private, or qualified investor issuance.

  • After issuance, comply with post-issuance disclosure obligations, including:

    • Annual progress reports

    • Timely updates on financial conditions, project milestones, compliance, and governance

For Buyers

  • Investors can purchase bonds through public offerings from CSX, private placements, or directly (if qualified). And wait for the payment of the returns!

  • Qualified investors may access more specialized offerings like Infrastructure Project Bonds or Securitization Bonds.

This information is for general reference only and does not constitute comprehensive legal advice. If you need further legal guidance, feel free to reach out to us at connect@vlplaw.co.

VLP Law Office
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