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Tuesday, 16 March 2021

House mulls changes to Sovereign Sukuk Act

Egypt to exempt sovereign sukuk from local regulatory oversight: A state-owned special purpose vehicle (SPV) that would be set up under the Sovereign Sukuk Act to manage the government’s sukuk sales may not be subject to oversight from the Financial Supervisory Authority if an amendment to a proposed framework governing sovereign sukuk sales passes the House of Representatives, Masrawy reported. The amendment, which was proposed by Finance Minister Mohamed Maait and approved “in principle” by the House Economic Committee on Sunday, would ensure the law treats sovereign sukuk in the same manner Egypt’s legal framework treats other instruments sold by the government, including eurobonds, green bonds, and local treasuries. It implies sovereign sukuk sales, unlike corporate sukuk, wouldn’t require the FRA’s approval, but rather an authorization from parliament.

Why this matters: Egypt’s maiden sovereign sukuk sale is expected soon after the bill makes its way into law. The bill, which received cabinet approval in November, would set up a company to issue sukuk on behalf of the government, govern how the debt is securitized and traded, and lay out the rights and responsibilities of sukuk holders — making sovereign sukuk a legal reality. The bill is currently being discussed by MPs at committee-level, a process after which it should make its way to a final general assembly vote.

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