Egypt to become first Arab country to issue Green bonds

DUBAI/LONDON (Reuters) – Egypt began advertising a five-year U.S. dollar-denominated Inexperienced bond on Tuesday at a yield of round 5.75%, a doc confirmed, in what could be the primary sale of inexperienced bonds by a authorities within the Center East and North Africa area.

FILE PHOTO: A view of the town skyline and River Nile from Cairo tower constructing within the capital of Cairo, Egypt December 5, 2019. REUTERS/Amr Abdallah Dalsh

The deal is anticipated to lift not less than $500 million for Egypt and is anticipated to cost in a while Tuesday, a supply acquainted with the transaction mentioned.

“It’s not an enormous dimension, however they’re planting the flag of their dedication to sustainability,” the supply mentioned.

He mentioned the goal was to diversify Egypt’s investor base in addition to making individuals conscious of the nation’s progress on the sustainability entrance.

“The investor presentation was attended by many who’re talking to Egypt for the primary time, we have been fielding requires sustainability analysts and world buyers,” he added.

Proceeds from the debt sale, which might be accomplished in a while Tuesday, might be used to finance or refinance inexperienced initiatives in sectors comparable to transportation, renewable power and power effectivity.

“The bonds provide worth when in comparison with the present secondary Egyptian curve,” mentioned Zeina Rizk, govt fastened revenue director at Arqaam Capital.

“I believe they may tighten as they are going to appeal to sustainability-focused buyers however given the latest weak point we’ve got seen within the markets pushed by a worry of a second wave, and a few type of market indigestion from the big variety of new points, market individuals are extra selective.”

The investor presentation for the bond units out a variety of Egypt’s commitments in direction of a sustainable technique, and contains rationalising water consumption, safety of the coasts and investing in renewable power.

Inexperienced bond issuance has soared in 2020, with Germany becoming a member of different European nations in issuing a debut Inexperienced bond earlier this 12 months.

A slew of European company debtors have issued debt linked to sustainability objectives, lots of them for the primary time, together with style labels Chanel and Burberry.

Within the Center East area, Saudi Electrical energy and Qatar Nationwide Financial institution issued Inexperienced bonds this month, and expectations are for extra issuance within the area within the coming months.

Credit score Agricole, Citi, HSBC and Deutsche Financial institution are managing Egypt’s bond difficulty.

Reporting by Abhinav Ramnarayan and Davide Barbuscia; Modifying by Gareth Jones and Ed Osmond

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