I love the smell of corporate paper in the morning
Hermes Securities Brokerage is set to soon resume a EGP 2 bn, two-year short-term corporate bond program it began last year, Al Mal reports, citing informed sources. The EFG Hermes subsidiary will sell EGP 400 mn of one-year, unsecuritized corporate bonds, after having raised the same amount when it kicked off the program in December last year. The planned issuance, which the sources didn’t give an exact date for, has already attracted interest from several institutional investors. Non-banking financial institutions and asset managers are expected to grab most of the sale as the company is looking to diversify its sources of funding away from banks, the sources said.
A busy year ahead: Following the upcoming sale, Hermes will have another EGP 1.2 bn of bonds to sell by December 2021 to complete the program.
Advisors: EFG Hermes is acting as financial advisor and main underwriter for the issuance. Zulficar & Partners was tapped as local counsel and KPMG Hazem Hassan as auditor. Banque Misr will be receiving subscription requests and acting as custodian.
Will this create a new market for short-term corporate paper in Egypt? The opening installment of the two-year program was the first sale of unsecuritized corporate bonds in Egypt since Orascom Construction completed a EGP 1.65 bn issuance and GB Auto completed a EGP 1 bn sale in 2010. Former Mobinil (now Orange) also sold EGP 1.5 bn in unsecuritized corporate bonds in 2009. The sale was helped by new rules introduced by the Financial Regulatory Authority allowing joint-stock and limited liability companies, banks, financial institutions, and SMEs to sell short-term debt instruments with maturities of less than two years to retail and institutional investors.
OTHER DEBT NEWS- The National Bank of Egypt and HSBC are courting local banks to participate in a USD 250 tranche of a loan for the UAE’s Canal Sugar as part of a larger USD 650 mn syndicated loan, Al Shorouk reports. The tranche will be provided in its West Minya project. Of the remaining USD 400 mn, USD 250 mn will be provided by European banks, USD 50 mn from the Saudi Fund for Development, and USD 100 from the syndicate of six Egyptian banks that provided the company with the first installment of a EGP 4.4 bn loan last year.