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Wednesday, 6 July 2022

CIRA moves one step closer to future flow securities

CIRA shareholders greenlight future flow securitization: Shareholders of EGX-listed education provider CIRA have approved the company’s plans for a EGP 2 bn future flow securitization program, moving it a step closer to debuting the asset-backed securities in Egypt, it said in an EGX disclosure (pdf) on Monday. At a general assembly meeting on Sunday, shareholders gave the green light for the portfolio to be handed to the company’s financial advisor, EFG Hermes, and signed off on the value of the first issuance, which will see it sell EGP 800 mn worth of bonds to financial institutions and other institutional investors.

The program: CIRA plans to issue EGP 2 bn worth of securities backed by future tuition revenues over the course of three years. The Financial Regulatory Authority approved the program last month.

The first issuance will wrap within the coming two months, Al Borsa quotes Mostafa Gad, co-head of EFG’s investment banking division, as saying. Bonds in the three-tranche issuance will be sold at EGP 100 each, and will carry tenors of three, five and six years.

Advisors: EFG Hermes is the financial advisor on the transaction, Zulficar & Partners is providing legal counsel, and PwC is the auditor.

Future flow securitization? Future flow securitization differs from traditional securitization in that it allows the securitization of payments that aren’t yet on the company’s balance sheet, giving companies access to liquidity without needing a big portfolio of accounts receivables. Future income — whether from club memberships, phone bills, utility payments, tuition fees or rents — is packaged into securities and offered to investors to raise capital. This gives public- and private-sector companies such as utilities providers, healthcare companies, telecom players, and education outfits a new way to access liquidity.

Background: Amendments to the Capital Markets Act that introduce future flow securitization were signed into law in March, after the FRA approved the instruments for use last May.

WANT TO LEARN MORE? Check out our explainer on future flow securitization here.

IN OTHER DEBT NEWS-

The World Bank’s Multilateral Investment Guarantee Agency (MIGA) is backing USD 98.3 mn worth of Scatec’s USD 334.5 mn green bond issuance to refinance six solar plants in Benban, according to a MIGA statement yesterday.

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