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Sunday, 6 December 2020

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.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt; Hassan Allam Properties (tax ID:  553-096-567), one of Egypt’s most prominent and leading builders; and Saleh, Barsoum & Abdel Aziz (tax ID: 220-002-827), the leading audit, tax and accounting firm in Egypt.