The Egyptian government is set to tap the Sukuk market. It is merely waiting for the final approval for its Sukuk law from parliament to issue its long-anticipated sovereign Sukuk, the finance minister confirmed. VINEETA TAN writes.
Mohamed Maiit in an official statement revealed that the government is preparing to debut its first Sukuk offering, one which has been in the making since 2012. Last month, the Egyptian Senate reportedly gave its in-principle approval to a sovereign Sukuk law which outlined a framework to facilitate the North African government to finally enter the sovereign Sukuk space.
Long in the making, the impending Sukuk facility is Egypt’s way of diversifying its funding sources to finance the national budget.
Maiit did not confirm the size of the offering; however, he did confirm that the assets underpinning the Sukuk are those privately owned by the state. A new dedicated company will be established to manage and execute the issuance of the Sukuk paper, which could be a facility of up to 30 years.
With no sovereign Sukuk issuances prior, Egypt is a relative newcomer to the Sukuk game. However, over the last year, things began picking up steam for the country as its private sector started tapping the Sukuk market to raise capital. In April 2020, Talaat Moustafa Group made history by being the first Egyptian corporate to issue a Sukuk offering, raising EGP2 billion (US$127.47 million). Financial services company Sarwa Capital issued a EGP2.5 billion (US$159.34 million) Sukuk facility in December 2020 and education services provider Cairo for Investment and Real Estate Development issued a EGP600 million (US$38.24 million) Islamic paper in January 2021. At least six other companies, including real estate developer Amer Group, are said to be planning Sukuk issuances within the year.