Egypt starts selling its 1st dollar-denominated sovereign sukuk with 11.6% initial return

CAIRO - 21 February 2023: Egypt started on Tuesday selling its first dollar-denominated sovereign sukuk as it seeks to secure foreign currency.

 

Bloomberg reported earlier that the government is seeking to raise up to $1.5 billion.

 

The three-year dollar-denominated sukuk is expected to be priced on February 21, with an initial yield of about 11.625 percent, according to Bloomberg.

 

Citigroup, Credit Agricole, Emirates NBD Capital, First Abu Dhabi Bank, HSBC Group and Abu Dhabi Islamic Bank are managing the deal.

 

This is the first time Egypt has turned to the international debt market since a $500m private placement of its first yen-denominated bonds, or samurai, in March 2022.

 

The International Monetary Fund (IMF) estimates Egypt's external financing gap at about $17 billion and expects its program to help secure an additional $14 billion from international and regional partners.

 

Moody's has assigned a (P)B3 rating to Egypt's proposed $5 billion sukuk programme, which will be used to finance investment and development projects, after it downgraded the country's sovereign credit rating to B3 with a stable outlook.

 

Egypt is supposed to repay a $1.25 billion international bond during February.

 

The $400 billion Egyptian economy has been battered by the Russian invasion of Ukraine, and the most populous Arab country is also facing a shortage of foreign currency.

 

It has also devalued the pound three times since March and reached an agreement with the International Monetary Fund (IMF).