MEMPHIS REISEN

FRA expects EGP 10bn in sukuk demand during 2024, approves unrated issuances – Dailynewsegypt

Sukuk, or Islamic bonds, are expected to see a high demand in the Egyptian market this year, with an estimated volume of EGP 10bn, according to Sayed Abdel Fodil, Head of the Non-Banking Supervision Sector at the Financial Regulatory Authority (FRA).

Abdel Fodil told Daily News Egypt that there has been a surge of interest from companies in issuing sukuk, especially after the FRA approved the listing of unrated sukuk, which must be backed by assets to protect the investors.

He said that the FRA’s Board of Directors will soon give the green light for the issuance of unrated sukuk, which will offer more flexibility and lower costs for the issuers.

He also said that the number of companies licensed to conduct securitization activities in the Egyptian market has risen to 7, and more applications are being received.

Some of the securitization companies operating in the market are Tharwat for Financial Securities, EFG Hermes, National Securities, ADIB Securities, GB Capital, and Baraka Securities.

The FRA’s decision to allow the listing of bonds and sukuk without a credit rating aims to facilitate the access of companies to the necessary financing for their expansion and investment plans through non-banking financial services.

The decision requires that the bonds and sukuk listed without a credit rating meet three conditions: their value must not exceed the net assets of the company, a disclosure report must be published before the start of trading that explains their nature and features, and they must be offered only to qualified investors through a private placement.

These amendments are part of the FRA’s efforts to diversify the financing options available for companies in the Egyptian market.