Egypt closed its maiden panda bond issuance in China yesterday with a CNY 3.5 bn (USD 478.7 mn) issuance, the Finance Ministry said in a statement. The three-year securities were priced at a 3.51% annual rate, lower than the yield on USD-denominated debt, Minister Mohamed Maait said. The issuance attracted “many” Chinese investors, he added, saying the proceeds will be used to meet the country’s sustainable development goals.

Accessing capital markets: “The issuance attracted high-quality onshore investors and allowed access to capital markets despite the recent volatility in global markets and widening of Egypt’s credit spreads,” Vice Minister of Finance Ahmed Kouchouk told Enterprise.

All for a green cause: The proceeds will be used to fund sustainable projects across a number of sectors including clean transport, healthcare, sustainable water use, renewable energy, affordable housing, and digital infrastructure as well as biodiversity conservation, Kouchouk told us. Egypt is the first African country to issue a guaranteed Panda sustainable bond.

International backing: The African Development Bank and Asian Infrastructure InvestmentBank provided guarantees for the issuance, a development Kouchouk said could “pave the way for other issuers, especially sovereigns in Africa, to access RMB-denominated financing and China’s interbank bond market.”

Remember: The inaugural issuance has been in the works since 2019, but was put on hold due to the pandemic. The ministry’s debt management recently brought the transaction back on the fast track for execution.

Reducing reliance on the greenback: The ministry hopes that the CNY can become “an important and significant part of Egypt’s basket of currencies” and that yesterday’s transaction will pave the way for further bilateral investment and sustainable financing between the two countries, Kouchouk said.

Tip of the hat to China: “It was a real honor to have worked with our Chinese partners in such a short timeframe to deliver a successful transaction,” Kouchouk said. “Our Chinese partners showed us nothing but the greatest support and cooperation.”

BACKGROUND- Tightening global financial conditions, rising borrowing costs, and with concerns in some quarters about our debt levels have effectively shut us out of Western capital markets. The ministry is planning to close a USD 500 mn issuance of JPY-denominated samurai bonds in the coming weeks, and raised USD 1.5 bn from its first-ever sovereign sukuk issuance in February.

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