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Sunday, 18 October 2020

Egypt lists green bonds on London Stock Exchange

Egypt’s five-year sovereign green bonds are now listed on the London Stock Exchange (LSE), the exchange said in a statement on Thursday. The USD 750 mn issuance — the first of its kind in the MENA region — was almost 5x oversubscribed, fetching more than USD 3.8 bn in bids for the bonds, which carry a 5.2% yield. “The success of the inaugural transaction highlights Egypt’s commitment to building a sustainable future and paves the way for many more issuers in the region to follow this example,” Denzil Jenkins, Interim CEO of London Stock Exchange said. Egypt’s paper will be traded on the Sustainable Bonds Market along with 240 bonds from issuers in over 60 countries

The offering also improves Egypt’s environmental rating and increases the confidence of foreign investors in the Egyptian economy, Finance Minister Mohamed Maait said. The inaugural issuance also comes as part of the government’s debt diversification strategy, which entails a shift towards longer-term debt, that the government hopes will constitute some 52% of borrowing by June 2022.

Proceeds from the offering will be used to finance the development of Egypt’s USD 1.9 bn portfolio of green projects, including renewable energy, clean transport, sustainable water and wastewater management, and pollution reduction and control. The World Bank is consulting the government on how to best spend these proceeds.

GREEN IS BIG NOW- Egypt and the UK will work together to set a partnership agenda on climate issues, and “promote adaptability, resilience and a green and resilient recovery from covid-19” ahead of the 2021 UN Climate Conference, which will be hosted by the UK, James Cleverly MP, minister of state for the Middle East and North Africa, said.

We’re not far from seeing Egypt’s first ever corporate green bond issuance: The European Bank for Reconstruction and Development, the French Development Agency’s Proparco, and the International Finance Corporation (IFC) are all considering participating in CIB’s upcoming maiden green bond issuance, Al Mal reports, citing unnamed sources. Investors are doing due diligence ahead of the offering, which was originally slated to take place this month. Heba Abdellatif, CIB’s head of debt capital markets, told us in June that the first tranche will see the IFC invest USD 50-65 mn in the five-year bonds. If successful, the IFC will bring its investment up to USD 100 mn in another tranche.

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