Egypt’s first ever state sukuk + green bond sales in pipeline

Egypt is looking to get its debt strategy on track as the government is currently “in an advanced stage” of a $ 500 million green bond offering in what would be Egypt’s maiden sovereign sale of the debt instrument, head of the debt management unit at the Finance Ministry Mohamed Hegazy tells Bloomberg.

Egypt is seeking to lure a new class of investors by issuing its first sukuk, or Islamic bonds, in both local and international markets in the fiscal year that started this month.

The ministry had tapped four banks earlier this year to manage and market the bond sale, which has been in the works for several months: Credit Agricole, Citibank, Deutsche Bank, and HSBC.

Credit Agricole and HSBC were also hired as “structural advisors.” The issuance was originally slated for FY2019-2020 as the Egyptian treasury planted a flag amid its effort to diversify its sources of funding.

“Attractive yields and reaching an agreement with the IMF helped us attract foreign inflows in this difficult time,” Hegazy said in an interview.

Egypt’s local-currency bonds gained 6.8 percent this year; the average return across emerging markets was flat.

Outside investors have pumped billions of dollars into Egypt’s debt market since a 2016 currency devaluation, part of a sweeping economic program. After a record Eurobond sale in May, Egypt’s considering issuing up to $7 billion this fiscal year.