The African Development Bank (AfDB) is backing our return to the Samurai bond market, where the Finance Ministry hopes to place a JPY-denominated sustainable bond worth the equivalent of USD 500 mn. The bond is part of a broader USD 4 bn slate of international debt issuances the ministry wants to make before the end of its current fiscal year in June 2026. Also in the package are Panda bonds, green bonds, and Eurobonds, we have previously reported.

The details: An environmental and social assessment released by the bankthis week (pdf) confirms it will extend a partial credit guarantee to help the Finance Ministry float the bond, the proceeds from which are earmarked entirely for green and sustainable projects, including renewables, clean transport (like the monorail), and water management.

SOUND SMART- What’s the AfDB actually doing? The AfDB’s partial credit guarantee (or PCG) will cover a portion of the bond’s principal. This “credit wrap” is the secret sauce: It provides critical comfort to Asian investors skittish about emerging markets, which should allow Egypt to secure longer maturities and cheaper pricing than we could on our own.

This is the second leg of the strategy: The transaction mirrors the structure of the RMB 3.5 bn Panda bond Egypt issued October 2023, which was also backed by the AfDB and the Asian Infrastructure Investment Bank.

Watch for the masterplan: The Finance Ministry should now be putting the final touches on its new public debt strategy, which it has said to expect before the end of this month. The roadmap aims to slash public debt to under 75% of GDP within three years (down from c. 85% last year) and cap debt servicing costs at 7% of GDP.

The “credit wrap” is the new normal

Our take: With global rates still steep, naked sovereign issuances are expensive. By lining up AfDB backing, the Finance Ministry is signaling that its strategy isn’t just about borrowing more — it’s about borrowing smarter. Using multilateral guarantees to de-risk Egyptian debt allows the state to access single-digit yields in Japan and China, balancing out the higher costs of traditional Eurobonds.

We’re becoming regulars in Asia

Why it matters: Successfully floating a Samurai bond in 2026 after the Panda issuance three years ago proves that Egypt can systematically access Asian capital markets. It’s a step toward rebalancing our portfolio of debt to reduce reliance on hot money and traditional Western institutional investors, creating a more resilient funding mix.

What’s next?

Mandate letters. With the AfDB assessment now public — a key prerequisite for the guarantee — we expect the Finance Ministry to mandate investment banks (likely including Citi and our friends at HSBC) as early as this month.

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