Four Gulf banks will subscribe to our first-ever local sukuk issuance hitting the market today, with settlement scheduled for the day after, according to a document seen by EnterpriseAM. The EGP 3 bn, three-year ijara issuance — a leasing-based Islamic security — will be linked to assets owned by the Finance Ministry in the Red Sea’s Ras Shukeir area, a source previously told us.

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Who’s interested? Our maiden local sukuk issuance has attracted the interest of Abu Dhabi Islamic Bank, Kuwait Finance House, Faysal Islamic Bank, and Al Baraka Bank, in addition to primary dealers from our banking sector, a senior government source told EnterpriseAM. “Interest from those Gulf banks is expected to enhance the competitiveness of local sukuk issuances," our source told us.

The issuance is part of a wider sukuk program, which was recently quadrupled on the back of strong demand to EGP 200 bn for the fiscal year, a senior government source told us. The government originally planned to take EGP 25 bn worth of local sukuk to market this fiscal year, before doubling its target amid strong appetite.

Competitive yields and longer maturities: The bids show the yield will be highly competitive, driven by increased interest in the forthcoming issuance, according to our source. The Finance Ministry also plans to extend the maturity of the new sukuk issuances after using the first tranche to establish a pricing framework, with the aim of launching a weekly issuance with maturities ranging between 3, 5, and 7 years, the source 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.

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