Friday, March 5, 2021

PROJECTS: ‘Egypt’s $750mln sovereign green bonds a historic milestone’ – Minister of Finance

Egypt’s green bond issuance last September, the first in the Middle East and North Africa (MENA) region, was a historical milestone and an essential step towards achieving its SDG agenda, Egypt’s Minister of Finance said during an online event.

The five-year bonds were issued at a yield of 5.25 percent and are listed on the London Stock Exchange.

Speaking at the virtual edition of Abu Dhabi Sustainable Finance Forum 2021 last week, Mohamed Maait said the bond was subscribed by over five times and attracted more than $3.8 billion of orders for an upsized transaction of $750 million [from $500 million].

According to the minister, the strong demand enabled the Egyptian government to price the bonds 50 basis points lower than the price announced at the beginning of the offer process.

He said the bond issue was “priced at 12.5 basis points negative new issue concession, which represented the highest negative new issue concession by Egypt to date and achieved the lowest five-year coupon for Egypt ever and the lowest US dollar coupon for Egypt since 2016.”

Speaking about the global interest in the green bond, he said over 30 ESG (Environment, Social and Governance) focused investors engaged in the dedicated fixed investor core, and over 100 investors from Asia, Europe, MENA, North America, and the UK viewed the pre-recorded presentation. The final order book was from 220 accounts and 16 new first-time investors, he said.

Investing in green projects

Earlier in his speech, the minister said Egypt had developed a total portfolio of eligible green projects worth $1.9 billion in September 2020. This consisted of 16 percent renewable energy projects, 19 percent clean transportation projects, 26 percent sustainable water and wastewater management projects, and 39 percent pollution control and prevention projects.

Egypt had also completed its Green Financing Framework in the same month covering six categories – green transportation, renewable energy, pollution prevention and control, climate change adaption, energy efficiency, and sustainable water and wastewater management.

Crédit Agricole CIB and HSBC were the structuring advisors for the Green Financing Framework, Maait said.

“To ensure that the $750 million proceeds of the green bond issue are injected towards new lending or existing projects aligned with the green bond project utilisation criteria, the Egyptian government has formed a Green Finance Working Group to work on the implementation and evaluation issues,” the minister said.

He disclosed that the government will prepare its first allocation report that specifies the allocation of the proceeds, how it was used, and in which projects, adding that an impact report will be published on an annual basis to provide a detailed environmental impact of all financially eligible green projects relying on the availability of relevant data.

The World Bank Group is providing technical assistance to Egypt for the post-issuance allocation and the impact reporting.

2021 plans

Egypt’s sustainable development plan for 2021 includes authorising green investment projects like sustainable transportation, renewable energy, solid waste management, desalination, and building modern and efficient sewage treatment plants, the minister said.

Egypt is also committed to increasing the share of renewable energy in the electricity mix to 20 percent by 2022 and 42 percent by 2035. “With strong private sector involvement, Egypt is on its way to achieving the 20 percent target ahead of the plan,” he said.

(Writing by Sowmya Sundar; Editing by Anoop Menon)

Disclaimer: This article is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer policy here.

© ZAWYA 2021

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