The head of the Public Debt Management Unit at the Egyptian Ministry of Finance, Mohamed Hegazy, revealed in an interview with Al-Arabiya, today, Thursday, that the ministry is seeking to issue a new Islamic sukuk in Egypt’s local currency during the current fiscal year.
Hegazy said, “We have taken steps to issue sukuk in pounds in the local market, but the size of the offering has not been decided, but it is still small compared to the following issuances. The liquidity in the local market is high, but we prefer the issuance to be small in size to explore the market.”
With regard to Egypt’s issuance of $1.5 billion in international sukuk, Hegazy said that the issuance is considered successful because of two factors: the first is the coverage rate, which exceeded 4 times, and the second is the rate of reduction in the yield by 75 points from 11.625% for the opening ending at 10.870%, and this is evidence of confidence and high Investors’ appetite for the Egyptian economy.
He explained: “If we compare the levels of return on the issuance of 3-year bonds with the return on sukuk, we will notice an improvement of 62.5 points less than on bonds, but globally we are witnessing an increase in returns.”
He added that the issuance of Egypt’s international sukuk attracted about 60% from the Gulf countries, 24% from Europe, 15% from America, and 1% from East Asian countries, which helped us collect the largest possible reduction in the interest rate.
He pointed out that the circulation of Egyptian sukuk after the financial settlement of the issue on February 28.
He continued: “The real estate assets guaranteeing the issuance included buildings and land owned privately by the state, and the guarantee includes the right to use those assets and buildings without prejudice to the ownership that remains for the state.”
With regard to the establishment of an international program for issuing sovereign sukuk for several years to come, at a value of $5 billion, Hegazy said: “I do not expect that we will issue new international sukuk during the current fiscal year, as we are satisfied with issuing $1.5 billion, but from the next fiscal year we will study our financing needs in the light of The study will determine our options, whether bonds or sukuk, according to the financial policy.
Today, Wednesday, the Egyptian Minister of Finance, Dr. Mohamed Maait, announced the successful issuance of the first issuance of sovereign Islamic sukuk in the history of Egypt, at a value of $1.5 billion, as the subscription value amounted to about $6.1 billion, which means that the subscription was covered by more than four times.
“The cost of the issue was less than the required return on bonds in the international secondary markets by more than 70 points, as the coupon price on the issue was reduced by about 75 basis points compared to the opening prices announced at the beginning of the offering process at the level of 11.625%, to close the issue coupon at 10.875%.” , according to the minister.
Maait described the demand for the issuance as “remarkable”, as more than 250 investors in various global financial markets submitted purchase requests, which attracted a new base of investors in the Gulf countries and East Asia as well as European countries and the United States of America, in addition to the quality of the quality of the investors witnessed by the offering. In asset managers, pension funds, insurance and investment funds, and banks, who are distinguished by their long-term investment, which has a positive impact in reducing price fluctuations.
The success of issuing the first issuance of sovereign Islamic sukuk in the history of Egypt 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, and investors in the Egyptian economy and its future, and its ability to deal flexiblely. With internal and external challenges, according to the minister.
For his part, the head of the Public Debt Management Unit at the Egyptian Ministry of Finance, Mohamed Hegazy, said that the Ministry of Finance has succeeded in establishing an international program for issuing sovereign sukuk for the next several years at a value of $5 billion, and it was registered on the London Stock Exchange on February 14, 2023, according to what is followed in International bond issuances, being the first issuance of sovereign Islamic sukuk in Egypt.
