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Tuesday, 18 January 2022

More green debt coming in 1H2022?

We could see a USD 400 mn corporate green bond issuance in the first half of 2022, Financial Regulatory Authority (FRA) head Mohamed Omran told Bloomberg Asharq yesterday (watch, runtime: 9:13). The green bond issuance will be used to finance renewable energy projects and could be cross-listed on the EGX and the German or Luxembourg bourses, Omran said, without disclosing the name of the issuer.

This follows Egypt’s first (and so far, only) corporate green bond issuance last year, when CIB sold USD 100 mn of the climate-linked securities to our friends at the International Finance Corporation (IFC), the proceeds of which were earmarked to finance green buildings.

More securitized offerings in the pipeline: About EGP 2.5-3.5 bn worth of securitized bonds from three companies could be issued in the first quarter, Omran said, adding that he expects securitizations to increase 15-20% y-o-y in 2022 amid increased appetite from the real estate sector. A total of 19 securitized bond issuances with a combined value of EGP 15.8 bn went to market last year, by our count, while this year has already seen a total of EGP 2.7 bn from issuers including GB Lease, CI Capital’s leasing arm Corplease, and Premium Card.

Proposals to allow companies to securitize future cashflows will encourage more companies to tap the securitization market, Omran said, adding that the draft amendments to the Capital Markets Act to make that type of offering possible are still awaiting parliamentary approval.

In the pipeline: Al Oula is looking to issue EGP 900 mn in securitized bonds in 1H2022, and the Financial Regulatory Authority has okayed issuances by Cairo Housing and Development and its subsidiaries worth a combined EGP 336 mn. Premium Card is also looking to tap the securitized bond market again this year with a two-tranche, EGP 500 mn issuance.

IN OTHER DEBT NEWS-

Are we going to see a revival of our Samurai bond plans? Finance Minister Mohamed Maait and Japan’s ambassador in Cairo discussed potentially issuing foreign currency bonds in Japan as part of Egypt’s debt diversification strategy, according to a ministry statement (pdf). The statement does not provide further details on the potential plans.

Sound familiar? Longtime Enterprise readers will remember that the government had been mulling selling JPY-denominated bonds back in 2019. The ministry had also been looking at RMB-denominated Panda bonds at around the same time, but Maait said in late 2020 that the planned sales were being pushed until at least FY2021-2022 because of complications caused by covid-19. Marketing foreign bonds in Asian markets requires more complicated clearance procedures such as new ratings assessments by Asian ratings agencies.

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