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Sunday, 29 November 2020

Sarwa sukuk sets record as biggest yet + first for an NBFS player

Egypt now has a sukuk issuance by a non-banking financial services player under its belt after Sarwa Capital closed its EGP 2.5 bn issuance, according to an EGX disclosure (pdf) Thursday. The sharia-compliant security carries a seven-year tenor and will be used to finance the expansion of Sarwa subsidiary Contact Credit and its affiliates. The bonds were offered exclusively through private placement to institutional investors and received an A- credit rating by Middle East Ratings and Investors Service (MERIS). This is only the second corporate issuance of the sharia-compliant securities after Talaat Moustafa Group closed a EGP 2 bn sale in April.

Advisors: Sarwa’s issuance was covered and guaranteed by Banque Misr and Misr Capital, and was co-underwritten by CIB and Ahli United Bank. ALC Alieldean Weshahi & Partners was legal counsel, KPMG Hazem Hassan provided financial auditing services, and Elite Consulting Group acted as independent financial consultant.

IS A HYBRID SUKUK NEXT? Amer Group’s anticipated issuance is set to hit the market in 1Q2021, Sarwa Capital CFO Ayman El Sawy told the local press. The Sarwa-managed offering could be Egypt’s first hybrid sukuk issuance with a mix of ijara and mudaraba bonds on offer. Local press reported in September that Amer could sell EGP 2 bn of the securities, though the final figure has not been confirmed. The Financial Regulatory Authority expects to see corporate sukuk issuance worth up to EGP 10.2 bn next year.

IN OTHER DEBT NEWS- Palm Hills plans to securitize EGP 1.6 bn of its portfolio in an issuance handled by the Arab African International Bank (AAIB), Hapi Journal reports. The company had said earlier this year it would be releasing the issuance, which is its largest to date, to capitalize on low interest rates and settle debts.

Advisors: AAIB, CIB and Al Ahli United bank will guarantee the issuance, while ALC Alieldean Weshahi & Partners will act as legal counsel and Grant Thornton Mohamed Hilal as financial auditor for the issuance.

What the heck is securitization, anyway? Check out our explainer for a primer on securitized bonds.

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