Egypt’s new debt strategy expected soon: The new public debt strategy for 2025-2030 could be released during 1Q FY 2025-2026, a senior government source told EnterpriseAM. The strategy, which is set to include social and sustainability bond issuances, was set to be rolled out at the beginning of this year. However, it was postponed due to “disruptions in the interest rates market and difficulty predicting the repercussions of previous [geopolitical] tensions on the bond market,” the source noted.

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What to expect from the new strategy? The current fiscal year will see the issuance of our first social and sustainability bonds, as part of rebuilding the public debt strategy. The move aims to help the government diversify its financing sources.

The government is currently conducting studies to set the timeline for its first issuance of social bonds or sukuk, our source said. This issuance will be backed by the Takaful and Karama program, which provides vital support to around 4.7 mn families across Egypt and is fully funded by the state budget. The new bonds will ensure the program’s continuity and expand its coverage to add new beneficiaries, strengthening Egypt’s ability to improve social support for its citizens, the source noted.

The first social bonds are expected to be issued abroad in the first half of the current fiscal year, with the goal of financing specific social programs such as poverty reduction and family support, our source said. The size of the first issuance is anticipated to range between USD 400-500 mn, the source added.

The strategy aims at diversifying the country's public debt instruments and introducing new ones, seeking to secure funding with varied and more competitive interest rates. This shift builds on the local debt market’s recent success, which drew in nearly USD 41 bn in foreign investments by the end of December 2024.

Public debt maturity extension is also a key objective: The strategy also aims to extend the average maturity of public debt to 4.5-5 years, up from 1.8 years currently. This move, according to our source, is intended to ease the annual debt burden on the state budget.

Egypt to launch a retail bonds market this year: The Finance Ministry is aiming to diversify debt instruments by introducing new tools, including the retail bond market this year, the source told us. This move will allow individuals, for the first time, the option of purchasing government debt instruments and reduce the government’s debt service payments. The move is pending ongoing amendments to the system governing primary traders.

The Finance Ministry is currently in talks with banks advising on its sovereign sukuk issuance to determine the optimal timing for the next issuance, the source told us.

REFRESHER- The Finance Ministry completed a USD 1 bn sovereign sukuk issuance on the Vienna Stock Exchange in June in a private placement, offering an annual yield of 7.875% with a three-year maturity. The private placement was fully subscribed by Kuwait Finance House and follows Egypt’s maiden sukuk issuance in February 2023.

More sukuk issuances could be on their way: The government is set to move forward with its plan to issue the first sovereign sukuk denominated in EGP at the beginning of FY 2025-2026, Finance Minister Ahmed Kouchouk told EnterpriseAM back in June.

The Finance Ministry aims to issue nearly USD 4 bn in debt during the FY 2025-2026 under the international debt issuance program, a government source told us in April. It also aims to lower the external debt held by public sector entities included in the budget by USD 1-2 bn.

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