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The Madbouly government postponed its first-ever local sukuk issuance to next Monday, with settlement scheduled for the following day, after originally being pencilled in for this week, a senior government official told EnterpriseAM. The move marks the third time the shariah-compliant issuance has been postponed.
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What is behind the delay? Officials in charge of arranging the issuance need more time to align and connect the technical systems of the Central Bank of Egypt, the Finance Ministry, and other involved entities so they can carry on with weekly issuances following the maiden issuance next week.
The forthcoming issuance is part of a wider sukuk program valued at EGP 50 bn — double the initial target planned for the fiscal year, a government official told us last week. The first EGP 3 bn, three-year tranche of the program will be an ijara issuance — a leasing-based Islamic security — linked to assets owned by the Finance Ministry in the Red Sea’s Ras Shukeir area, our source from yesterday told us.
Several banks are interested in subscribing to the first-of-its-kind issuance in the local market, according to our source from last week. The Finance Ministry had been holding meetings with representatives from 15 banks in an attempt to further raise the program to EGP 200 bn by next June, they added.
The issuance is expected to boost investments in local debt instruments and attract a new segment of investors eyeing shariah-compliant securities, with the aim of diversifying the country’s range of debt offerings, we were told.
This program comes within the public debt strategy framework set to launch nextDecember, which will feature social and sustainability bond issuances. The strategy aims to reduce public debt to below 75% of total GDP in three years, down from 85% in the previous fiscal year, while reducing debt servicing costs to 7% of GDP and extending the debt maturity to five years.
