Despite current economic challenges, Egypt’s commitment to its 2030 Vision to shift to a more sustainable economy continues apace. One of the clearest proof points of this commitment is Egypt’s successful issuance for its first three-year sustainability panda bond with a RMB 3.5 bn issuance. This is another market ‘first’ for Africa and the Middle East region following Egypt’s first ever sovereign green bond issuance in 2020.

A panda bond is a RMB-denominated bond, sold in China, from a non-Chinese issuer. This transaction is considered the largest panda sustainable sovereign issuance, giving Egypt access to untapped sources of capital to drive sustainable economic growth.

A door-opener for emerging markets

The transaction is significant because this inaugural sustainability panda bond integrates a first-of-its-kind dual guarantee structure, making it the first ever panda bond backed by two supranational entities.

The combined guarantees from the African Development Bank and the Asian Infrastructure Development Bank, with triple-A ratings, generated significant interest from investors and secured competitive terms for the transaction.

This is an important step that can pave the way for other issuers, especially sovereigns in emerging markets and Africa, to access a new innovative funding solution that will enable them to penetrate new markets and mobilize sustainable financing at competitive terms from international investors and accelerate their net zero transition strategies.

HSBC connections

The Egyptian government hired HSBC as a joint bookrunner to execute this innovative transaction. Our international connectivity and deep roots in China and the Middle East helped us design the transaction’s structure and therefore help Egypt to diversify funding sources with access to the world’s second-largest bond market.

The proceeds will be used to fund sustainable projects across multiple business sectors including clean transport, healthcare, sustainable water use, renewable energy, affordable housing and digital infrastructure as well as biodiversity conservation. This aligns perfectly with Egypt’s national climate change strategy.

We’re proud of our role in this important transaction across this very important trade corridor between the Middle East and Asia. We are proud to work in partnership with governments and our customers to mobilize international finance to help build a more sustainable, resilient, and prosperous future.

Nadeem Habib (LinkedIn) is head of financial institutions and public sector at HSBC Egypt.

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