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Sukuk issuances just got easier: Companies will now be able to sell sukuk without first acquiring a credit rating after the Financial Regulatory Authority (FRA) waived the requirement, the regulator said in a statement (pdf) yesterday. The move aims to boost the local sukuk market by making it less expensive for firms to take issuances to market, and comes after Prime Minister Moustafa Madbouly greenlit amendments to the executive regulations to the Capital Market Law.
Planning a sukuk program? You only need to ask once. Under the amendments, companies will only require a single approval before starting a program of multiple sukuk issuances, according to the statement. The program needs to wrap up within three years of the FRA’s approval or a set time period specified by the regulator, whichever is shorter. Companies also must publish a disclosure containing information about the issuance and the investment risks before moving ahead with the sale.
The local market could use a boost: Since Talaat Moustafa Group debuted corporate sukuk in Egypt in 2020, companies have raised some EGP 12.9 bn from selling the shariah-compliant securities, according to data tracked by Enterprise. This is dwarfed by the local securitization market, which has seen firms raise EGP 127 bn over the same period. No corporate sukuk issuances have gone to market so far in 2023.
Banks are lining up to manage issuances: The regulator has given initial approval for Abu Dhabi Islamic Bank’s Abu Dhabi Capital and the National Bank of Egypt to manage sukuk issuances, Daily News Egypt reported yesterday, citing sources.
Corporate bonds next? The FRA said earlier this year that it is also looking to allow companies to issue corporate bonds without a credit rating.
ALSO- Sustainable funds + expanded ETFs. The regulatory amendments open the door for establishing sustainable development funds that will invest in green and other ESG projects, as well as an expansion of exchange-traded funds. The statement didn’t provide further information on the ETFs or details on the requirements for sustainable funds.
