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Wednesday, 7 November 2018

Egypt to issue green bonds next fiscal year?

EXCLUSIVE- Gov’t aims to issue green bonds next fiscal year: The Madbouly government is considering its maiden green bond issuance in the coming fiscal year as part of its plan to diversify its base of funding under its still-emerging debt control strategy, a senior government official told Enterprise. Green bonds could make their debut next to other new-to-Egypt instruments including sovereign sukuks, a form of Islamic bond, the official noted, saying the policy framework for green bonds is still on the drafting table.

What’s a green bond? Effectively, a lower-yield form of bond that finances “climate-smart” projects including renewable energy and energy-efficiency projects in emerging markets. The International Finance Corporation and the Financial Regulatory Authority have been discussing since June what guidelines for Egyptian green bonds might look like. You can read more about green bonds here courtesy the IFC, which notes that more than USD 155 bn has been raised via green bonds globally.

Green bonds have not been performing well this year: Green bonds sales fell 18% y-o-y in 3Q2018 amid a decline of interest in the environmental finance market, the Financial Times reports. Issuers sold USD 31.6 bn in 3Q2018 down from USD 38.5 bn in the same period last year. Moody’s had originally forecast that total green bond sales this year would hit USD 250 bn, a considerable increase from last year’s record USD 163 bn total. Moody’s then revised that prediction down to USD 175-200 bn after sales slowed in 2Q2018.

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