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New sukuk projects awaiting bids

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Finance Ministry advisor: Sukuk not affected by Egypt’s recent credit downgrading

Sukuk is expected to finance needed investments, says officialThe Egyptian government expects $10bn to $15bn annual investments from projects financed by sukuk said Ahmed El Naggar, an Islamic finance advisor to the minister of finance.

“We expect to receive the first bids for projects using sukuk after the holy month of Ramadan in July,” he said during a conference on the practical application of sukuk, jointly organised by the Ministry of Finance and the Islamic Development Bank (IDB).

On Sunday the new minister of finance, Fayad Abdel Moneim, emphasised that sukuk would not be affected by the recent downgrading of Egypt’s credit rating, since this would only affect only bonds related to credit, and sukuk are financing mechanisms based not on credit but on the ownership of assets.

Abdel Moniem said that the Ministry of Finance was especially keen on “selecting projects with excellent financial and social returns”.

He pointed out that they are studying several potential projects, including the establishment of grain storage silos and a railway line linking Ain Shams to the Tenth of Ramadan City.

Abdel Moneim added that the ministry will present to the public the draft of executive regulations for the sukuk law once it is completed.

The bank is going to contribute to promoting sukuk bids and will also subscribe to these projects itself, said Abdel Aziz El-Hanaey, deputy head of the IDB.

“The IDB is going to provide technical support for IPOs in pricing, and study selected projects that sukuk will fund,” he added.

The global sukuk market has grown in the past three years, with bids for sukuk projects jumping from $34bn in 2009 to more than $140bn in 2012, most of which were sovereign funds, representing 78% of sukuk bids across the world.

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Hend El-Behary

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