The government gave the International Finance Corporation (IFC) the green light to resume its EGP-denominated bond program plan, a government source told EnterpriseAM. Under the proposed plan, the World Bank’s private sector-focused arm will list the bonds on the EGX before on-lending the proceeds to Egyptian private sector companies.

(Tap or click the headline above to read this story with all of the links to our background as well as external sources.)

The IFC is expected to issue up to EGP 100 bn worth of financial instruments in the first phase — equivalent to USD 2.1 bn at today’s exchange rate — with the initial issuance likely to take place before the end of 2025 or in 1Q 2026, the source said.

The program is all about the IFC acting as a market catalyst, helping persuade otherwise hesitant local investors to mobilize their capital and channel it to local companies. The IFC’s triple A rating can attract large local players with substantial EGP liquidity — think pension funds and ins. companies — that are only really interested in long-term and, importantly, safe assets. Via the IFC as essentially a mediator and guarantor, these funds originating from local investors can be made available to local companies — especially those that have difficulty acquiring traditional financing.

It also protects local companies looking to borrow from the risk of currency mismatch, as the IFC will on-lend EGP-denominated loans. Private sector borrowers often have to borrow in USD. This means that swings in the exchange rate create a lot of uncertainty, making financial planning difficult. The unpredictable liability can also scare away investors and, in the worst-case scenario, lead to bankruptcy. IFC-led loans also help in setting a reasonable pricing benchmark for others in the market to follow.

Issuing EGP-denominated bonds outside of Egypt could also be part of the plan, with a proposal from the IFC to expand the program to foreign markets getting the green light from the Finance Ministry, our source told us.

But there are still quite a few details to iron out, with work currently underway to formulate the mechanism and exact plan for both the local and international issuances planned by the IFC, our source added.

Tags: