Egypt’s return to the international debt market is off to a good start, with its USD 1.5 bn sukuk offering receiving over USD 9 bn in subscription requests, according to a statement from the Finance Ministry. The dual-tranche sukuk issuance — scheduled for 7 October — is split between a USD 700 mn, 3.5-year tranche and a USD 800 mn, seven-year tranche.

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REMEMBER- The issuance stands as Egypt’s third-ever sovereign sukuk issuance and the fiscal year’s first, 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.

YOU HEARD IT HERE FIRST- EnterpriseAM on Tuesday reported that Egypt returned to the international debt market with a USD 2 bn dual tranche sovereign sukuk issuance.

Yields are a step lower than prevailing rates in the secondary market, with the 3.5-year tranche’s 6.375% yield a good 20 bps below prices for Egyptian bonds with the same maturity. The seven-year tranche’s 7.950% yield is down 35 bps on comparable Egyptian debt of the same maturity.

The new issuance’s yields are also lower than those on our three-year maiden sukuk tranche in 2023, which was initially priced at 11.0% before market momentum dragged the yield down. Insider sources in previous comments to EnterpriseAM attributed the dip to an improvement in our credit rating and the stable economic outlook.

The Finance Ministry’s strategy is to improve government debt by focusing on diversifying financing sources and broadening the investor base, according to the statement. This, it says, will help reduce financing costs and extend debt maturity while continuing to sustainably reduce external debt on an annual basis

What’s next? The bonds will be listed on the London Stock Exchange when the issuance is closed, we were told earlier this week prior to the official announcement.

ADVISORS- Our friends at HSBC are leading the issuance, along with Citibank, Dubai Islamic Bank, First Abu Dhabi Bank, and Abu Dhabi Islamic Bank.

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