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Egypt returned to the international debt market yesterday with a USD 2 bn dual tranche sovereign sukuk issuance, comprising tenors of three and seven years, with the offering advisors inviting investors to subscribe, senior government sources told EnterpriseAM.
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REMEMBER- The issuance stands as Egypt’s third-ever sovereign sukuk issuance, following June’s USD 1 bn sovereign sukuk issuance, which was fully subscribed by Kuwait Finance House, and our maiden sukuk issuance back in 2023.
The issuance is the first international issuance of the fiscal year and is composed of a USD 1.25 bn, three-year tranche with an indicative yield of 8.625%, while the longer-term tranche is valued at USD 750 mn with an interest rate of 9.45%.
The issuance is twice as big as we were expecting. A government source told us in August that Egypt may tap the international debt markets with a USD 1 bn sovereign sukuk tranche by September or October as a part of the country's USD 5 bn international sovereign sukuk program.
The new issuance’s yields are significantly lower than those on our maiden sukuk tranche, which was initially priced at 11.0% before market momentum dragged the yield down. Our sources attributed the dip to an improvement in our credit rating and the stable economic outlook.
There are more international debt issuances in the pipeline, with the Finance Ministry moving forward with plans to issue USD 3-4 bn in international bonds this fiscal year to help address its USD 11 bn external financing gap. The planned issuances could include EUR- and USD-denominated securities, sustainability bonds, sukuk, and CNY- or JPY-denominated instruments, according to our sources.
What’s next? The bonds will be listed on the London Stock Exchange when the issuance is closed, we were told.
ADVISORS- Our friends at HSBC are leading the issuance, along with Citibank, Dubai Islamic Bank, First Abu Dhabi Bank, and Abu Dhabi Islamic Bank.
