Cambodia’s First Debt Ratings Officially Announced

The government and its financial ratings adviser, investment bank Credit Suisse, on Monday officially announced the nation’s first sovereign debt ratings from Moody’s and Standard & Poor’s.

“The ratings are a milestone in improving investor confidence in Cambodia and show Cambodia’s willingness to make public its financial health,” Deputy Prime Minister Sok An said in a statement released Monday by the Council of Ministers.

Moody’s gave Cambodia a speculative-grade B2 ranking, on par with Bosnia-Herzegovina and Venezuela. Indonesia and the Philippines rank one notch higher than Cambodia, Vietnam two notches higher and Thailand seven notches higher, according to Moody’s.

Standard & Poor’s, whose rating became public in April, gave Cambodia a B-plus, on par with Mongolia and Pakistan but below both Vietnam and Thailand.

Speaking at Monday’s press conference at the Council of Min­isters, Kim Saysamalen, the De­partment Commissioner General of the Supreme Council for State Reform, said a committee of 15 officials from various ministries and government bodies had collected data for the ratings review process, which began in 2003. Both Moody’s and S&P independently vetted the government data, he added.

Moody’s Vice-President Tho­mas Byrne praised Cam­bodia’s “significant inflows” of foreign direct investment and “recent stability achieved in Cambodia’s young, democratic political system,” in a statement released Monday by Moody’s.

“However, the very weak state of governance—in terms of overall effectiveness of government operations, regulatory quality and rule of law—adversely affect[s] Cam­bodia’s credit fundamentals,” he added.

SRP leader Sam Rainsy said that the Moody’s report overlooked two major risks of instability: unemployment, especially among the young, who account for over half the population, and increasing numbers of landless farmers. There is, he said, an “increasing level of frustration due to land grabbing stemming from corruption and rocketing land prices stemming from speculation and money laundering.”

Moody’s, he said, “underestimated the danger facing Cambodia.”

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