THIS MORNING: Sovereign sukuk as soon as next week? And worth up to USD 5 bn?
Good morning, lovely people, and a very happy THURSDAY. We’re closing out the week with another packed issue.
THE BIG STORY here at home: Are we inching closer to our maiden sovereign sukuk issuance? Egypt aims to make its first sovereign sukuk sale as soon as next week, Bloomberg reports, citing sources it says are in the know. The government could begin roadshows for the sale this week, the sources said, with the final timing of the issuance dependent on market conditions.
How much are we looking to raise? Bloomberg reports that the issuance could be worth up to USD 1.5 bn, while FinMin has previously said it will look to issue USD 1.5-2.5 bn of the shariah-compliant bonds.
Moody’s, meanwhile, has weighed in on an offering worth up to USD 5 bn, having given this week a (P)B3 rating to a potential USD 5 bn sukuk issuance by the Finance Ministry’s sukuk company. The issuance “will be used by the company to purchase the usufruct rights to eligible real estate assets,” with the proceeds received by the government set to “finance investment and development projects included in the economic and social development plan in the state's general budget,” Moody’s writes. The P(B3) rating reflects Moody’s recent downgrade of our sovereign credit rating on “reduced external buffers.”
EGP WATCH- The EGP stabilized against the USD yesterday at 30.62, according to central bank figures. The currency passed the 30 mark at the end of January following a sharper devaluation that helped stimulate the return of foreign inflows and alleviate FX woes that had stalled imports.
But traders see the EGP under pressure over the coming 12 months, Bloomberg reports, saying 12-month non-deliverable forwards eased 1.2% yesterday to 36.025 against the greenback. That suggests traders see the EGP losing a bit more than 14% of its value against the USD over that period.
The next choke points to watch for: Demand for USD is unlikely to ease substantially in the run-up to Ramadan as traders finish stocking imported essentials for the holy month (they’re doing so a bit later than usual thanks to the FX crunch). Pressure will then tick up again in mid-April when dividend repatriation season begins in earnest.
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THE BIG STORY ABROAD-
A surprise exit by David Malpass: World Bank President David Malpass is set to step down from his post by the end of the bank’s fiscal year in June, he said in a statement on LinkedIn. Malpass’ surprise exit comes with less than a year remaining in his five-year term.
It’s about climate: The bank will “be well-positioned to feature sustainability more clearly in the mission” come the new fiscal year, Malpass said. He has been widely criticized for his attitude towards the climate crisis, last year refusing to say whether he believed in manmade climate change. The Financial Times, CNN, and Bloomberg have more on the news.
CORRECTION- El Sewedy Data Centers, a subsidiary of El Sewedy Capital, this week signed an MoU to build three data centers in Egypt, not El Sewedy Electric as we wrote yesterday. We’ve since updated the story on our website.