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Monday, 30 November 2020

Palm Hills closes EGP 1.25 bn securitized bond sale + more corporate sukuk issuance on the way

Palm Hills (PHD) has closed a triple-tranche EGP 1.25 bn securitized bond issuance, in a transaction handled by CI Capital Investment Banking (CIIB) and the Arab African Bank, Palm Hills (pdf) and CI Capital (pdf) said in EGX filings. The issuance, backed by a receivables portfolio worth EGP 1.5 bn, is the company’s largest to date and was issued in tranches carrying maturities of 13, 36, and 61 months that received AA+, AA, and A ratings, respectively, from ratings agency MERIS.

Advisors: AAIB and CI Capital Investment Banking acted as the financial advisor, promoter and manager, while CIB and Al Ahli United Bank underwrote the issuance. ALC Alieldean Weshahi & Partners acted as counsel and Grant Thornton Mohamed Hilal as financial auditor.

ALSO FROM THE DEBT MARKET- An unnamed financial services company is working on a EGP 500 mn mudaraba sukuk issuance, with an eye to hit the market in 1Q2021, Sayed Abdel Fadeel, head of the Financial Regulatory Authority’s (FRA) corporate finance department told Hapi Journal. The company plans to use the proceeds to fund its subsidiaries, and list up to 10% of the sukuk in a retail offering on the EGX. Abdel Fadeel gave no indication of who the issuer might be, noting only that it’s a holding company.

Also in the pipeline: A company in the agricultural sector could take EGP 250 mn-worth of sharia-compliant bonds to market in 1Q2021, Abdel Fadeel said. The sukuk, known as “istizraa,” fund agricultural projects. News of both potential issuances comes after Sarwa Capital closed its EGP 2.5 bn sukuk sale last week. Sarwa’s issuance was only the second corporate sukuk issuance in Egypt, following Talaat Moustafa’s EGP 2 bn sale in April.

A total of EGP 10 bn-worth of sukuk will have hit the market by the end of 2021, Abdel Fadeel said. The FRA is working to stimulate the sukuk market, with plans to identify companies likely to need sukuk financing, drum up interest for sukuk, and reduce the cost of issuing the debt instrument, he added. Capital market regulations issued in 2018 opened the door for new financial instruments including futures, sukuk, and green bonds.

Who’s in the market for debt? Ora Developers expects to sign a EGP 1.5 bn loan agreement this month with a syndicate of banks led by Banque Misr to fund the company’s ZED project in Sheikh Zayed, Hapi Journal reports, quoting Ora Developers CEO Haitham Abdel Azeem. The real estate developer plans to spend EGP 3 bn on construction in 2021, said Abdel Azeem. Ora had already obtained an EGP 1 bn loan for ZED through Banque Misr earlier this year.


CORRECTED ON 21 December 2020

An estimated EGP 10 bn-worth of sukuks are expected to hit the market in 2021, not EGP 10-mn as previously written.

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