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Tuesday, 29 September 2020

Egypt could take its debut sovereign green bond issuance to market as soon as today

Egypt could take its debut sovereign green bond issuance to market as soon as today, Bloomberg reported yesterday. The USD 500 mn offering of five-year bills will take place depending on market conditions, the business information service says, citing a person familiar with the matter. This comes a day after the Finance Minister Mohamed Maait said the ministry was “preparing to launch” the offering, which would be the first sovereign green bond issuance in both Egypt and the region. Egypt currently has a USD 1.9 bn portfolio of green projects as it looks to capitalize on growing investor appetite for climate-friendly securities.

FinMin confirms investment banks managing the offering: A Finance Ministry document picked up by Reuters said that Credit Agricole, HSBC, Citibank, and Deutsche Bank — who were tapped earlier this year to manage and market the offering — will organize calls with investors ahead of the sale.

The government is offering green bonds as part of its broader debt diversification strategy, which will also see it offer sukuk, eurobonds, and potentially zero-coupon bonds to capture a wider investor base. The strategy also entails a shift towards longer-term borrowing, in order to reduce our reliance on short-term debt instruments, plug fiscal deficits, and help reduce the annual debt servicing bill to 20% of GDP. The goal is for long-term debt to constitute some 52% of borrowing by June 2022.

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