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Tuesday, 19 July 2022

Investors to bid for rating agency license this quarter

A second local credit rating agency could be in the works: A group of investors led by MGM Banking and Financial Consultants Chairman Gamal Moharram is in talks with the Financial Regulatory Authority (FRA) for a license to operate a credit rating agency, Dreny and Partners Founding Partner Moataz Dreny told Enterprise. The investors are finalizing the company’s structure and plan to file a request for a license sometime this quarter, he said, without disclosing their identities. They will also hire an ex-Moody’s industry expert to head the firm, Dreny said.

The FRA wants more local rating agencies: The Financial Regulatory Authority (FRA) in February made it easier for credit rating companies to get operating licenses in Egypt by scrapping a requirement for them to be at least 10% owned by international firms.

Egypt currently only has one credit rating agency: Middle East Rating and Investors Service (MERIS), a joint venture between Moody’s and Finance and Banking Consultants International (FinBi).

The rationale: A single rating agency can only rate so many bonds, and with the growing popularity of asset-backed securities in Egypt more firms are needed to expand capacity.

IN OTHER CAPITAL MARKETS NEWS-

Egyptian Modern Education Systems has completed the move from small-cap index Nilex to the EGX, with an initial market cap of EGP 100.5 mn, it said in a disclosure (pdf) yesterday. Shares closed up 0.7% on Monday at EGP 0.14.

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