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Sunday, 3 February 2019

Egypt to issue sukuk worth USD 1-1.5 bn in FY2019-20

EXCLUSIVE- Egypt could issue a sukuk worth USD 1-1.5 bn in FY2019-20: The government could issue a sovereign sukuk (a form of Islamic bonds) in FY2019-20 for the first time, a senior government official tells Enterprise. The maiden issuance could be worth USD 1-1.5 bn and would be a test of investor appetite for the debt instrument. The government is widely optimistic about the market for sukuks and expects to rely on the bonds as a form of borrowing down the line.

FinMin kicking off Asia eurobond roadshow this month: Separately, the Finance Ministry could begin as early as mid-February a roadshow in Asia for Egypt’s upcoming international issuances, our source says. The ministry is planning to sell between USD 3-7 bn in USD- and EUR-denominated bonds, in addition to green bonds and Egypt’s first JPY-denominated bonds. The ministry expects to kick bring the Yen-denominated bond issuance to the market first, but the choice of which issuance to begin with will depend on the outcome of the roadshow and input from the investment banks the ministry has hired to advise on the issuances.

Background: The Finance Ministry had presented an initial draft of next fiscal year’s state budget to President Abdel Fattah El Sisi last month in which it set a revised debt target for the country. The ministry has also drafted a comprehensive debt control strategy that will aim to reduce Egypt’s public debt to 72-75% of GDP by 2021-22 from 98% today, a government source had told us. The strategy, which is currently pending sign-off from Cabinet, plans to diversify Egypt’s sources of borrowing through the introduction of new instruments, including sukuk.

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