Egypt raised $1.5bn worth of three-year sovereign sukuk at a yield of 11% on Tuesday. The offering was about 4x oversubscribed, according to Minister of Finance Mohamed Maait.
The issuance landed orders totalling $6.1bn. The debut sharia-compliant bonds will be listed on the London Stock Exchange.
Maait said, in a statement on Wednesday, that this issuance witnessed a remarkable turnout, as more than 250 investors in various global financial markets submitted purchase requests, pointing out that this issuance attracted a new base of investors in the Gulf and East Asia areas, Europe, and the United States.
He explained that the success of this offering comes in light of turbulent global economic and political conditions, and the high cost of financing as a result of a sharp inflationary wave, in a way that sends a strong message of confidence from global financial markets in the Egyptian economy and its future, and its ability to flexibly deal with internal and external challenges.
ADSERO – Ragy Soliman & Partners acted as the local legal advisor to the Egyptian Ministry of Finance on the establishment of the sovereign sukuk programme. ADSERO worked alongside Clifford Chance, the international advisor to the ministry.
Zaki Hashem & Partners acted as local legal advisor to the joint lead arrangers, and Linklaters acted as international counsel to the joint lead managers.
Ahmed Kouchouk, Deputy Minister of Finance for Financial Policies, said that Egypt is pleased to join the group of countries issuing sovereign sukuk, and we appreciate the high turnout of investors for this successful issuance, which demonstrates their support and confidence in the government’s efforts to diversify funding sources.
He added that Egypt has prepared for this offering by issuing the Sovereign Sukuk Law and its executive regulations to provide the necessary legislative umbrella for creating a new type of government securities that is compatible with the principles of Islamic Sharia, in cooperation with leading banks in the field of Islamic finance and sukuk issuances and with the help of local and international law firms, to cover all technical aspects and legal and marketing in accordance with international practices in accordance with the principles of Islamic law.
Mohamed Hegazy, Head of the Public Debt Management Unit at the Ministry of Finance, explained that one of the most important provisions of the law and its executive regulations is that the assets be privately owned by the state for investment and development projects included in the economic plan of the state’s general budget.
He pointed out that the importance of sovereign sukuk is due to the fact that they are new alternatives to provide the necessary financing for investment and development projects included in the economic plan of the state’s general budget in a manner consistent with the state’s efforts to enhance aspects of spending to improve the standard of living of citizens, and it also helps in attracting a new segment of Arab and foreign investors in particular from the Gulf and Asian countries who prefer financial transactions that are compatible with the principles of Islamic Sharia, which helps in increasing local and international foreign cash flows.