Moataz Al-Derini —Founding Partner of Al-Derini Legal Consultations Office — revealed that the office is currently finalising the legal procedures to establish a credit rating company in favour of a group of local investors that he refused to identify at the moment.
Al-Derini told Daily News Egypt (DNE) that a meeting was held with the Financial Regulatory Authority (FRA) last week to present the initial papers and discuss accelerating the establishment process.
He pointed out that the FRA is performing a background check on the investors to ensure that there is no conflict of interest.
Al-Derini added that allowing the establishment of new credit rating companies in the Egyptian market would accelerate the pace of issuance in addition to providing more than one model of credit assessment in the Egyptian market, especially the cost component stemming from competition in the market.
Previously, the Board of Directors of the FRA agreed to cancel the requirement that an international credit rating agency contribute 10% to the capital of companies wishing to engage in credit rating activity in the local market in a move aiming to increase the number of local credit rating companies and strengthen the non-banking financial sector.
The amendment was issued to stimulate the presence of national credit rating companies in the non-banking financial sector and increase their number, which contributes to strengthening the sector’s capabilities and creating a competitive climate within the national economy that serves the interests of dealers from institutions, markets, and clients and allows dealing with more than one alternative to creditworthy companies.
This comes in light of the increase in the number of bond issuances during the recent period, which amounted to 24 issues in 2021, taking into account the doubling of their numbers following the issuance of legislation related to securitising future financial rights and sustainable development bonds in implementation of Egypt’s 2030 Vision for Sustainability.