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Thursday, 21 November 2019

Egypt’s first sukuk issuance coming in 1Q2020, green bonds coming next year

Egypt’s first sukuk issuance coming in 1Q2020? Egypt’s first sukuk issuance is expected to see the light of day before the end of 1Q2020, Financial Regulatory Authority (FRA) boss Mohamed Omran said at a presser yesterday, according to Al Mal. Omran did not disclose any further details on the expected issuance, but we know that two companies partially owned by the government had expressed their interest in June in issuing sukuk bonds to finance new projects this year. One of the companies said it will carry out the issuance through Sarwa Capital, which was granted the country’s first sukuk issuer license in July, and now has the green light to issue the sharia-compliant bonds through its sukuk arm, Sarwa Sukuk Company.

Green bonds also coming next year: Omran also said he expects the first green bond sale to hit the market sometime next year, saying that this is the “biggest challenge” for financial markets over the coming period. The FRA has put in place the regulatory framework for the bonds, he said.

Background: Sukuk and green bonds are among several new financial instruments that are expected to be introduced to the Egyptian market, and were allowed for under the executive regulations to the Capital Markets Act issued in July 2018. The market regulator had issued the regulations governing sukuk in April, which stipulate that issuances must be worth at least EGP 50 mn and be approved by a religious committee, among other requirements. The FRA had in August named 11 independent institutions to oversee issuances of green bonds, and decided earlier this month to slash service and inspection fees on the bonds. The government has previously hinted it may issue green bonds locally.

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