The Madbouly government is preparing to issue its first ever local sovereign sukuk this month — the EGP 3 bn three-year instrument is set to hit the market on Tuesday, 28 October, a senior government official told EnterpriseAM.

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

The upcoming issuance is part of a wider sukuk program worth EGP 50 bn — double the initial target planned for the fiscal year, according to our source. The Finance Ministry is holding meetings with representatives from 15 banks in a bid to further increase the program to EGP 200 bn by next June, the source added.

We had an idea this was coming: We were previously told that the first two tranches of the program will be valued at EGP 3-4 bn, and that they will be offered before the end of this year..

The issuance is expected to lure more investors to our local debt instruments, which will likely be reflected in the yields offered for such instruments.

To back the sukuk: The issuance will be backed by a new Ras Shukeir project involving one of the Gulf’s sovereign wealth funds, with proceeds earmarked for reducing public debt.

The government wants to diversify its debt instruments and attract more investors to the local debt market with lower interest payments and borrowing costs, sources previously told us.

REMEMBER- The Finance Ministry is planning to unveil its new public debt strategy this December, which will feature social and sustainability bond issuances. The strategy aims to bring public debt down to below 75% of GDP within three years, from 85% in the last fiscal year, while cutting debt servicing costs to 7% of GDP and extending debt maturity to five years.

Tags: