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Thursday, 26 November 2020

Egypt launches its first of kind green bonds in London Bourse, worth $750 mln

UK officials welcomed the launch, considering it a historic moment in UK-Egypt relations

Doaa A.Moneim , Thursday 15 Oct 2020
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Egypt launched Thursday, virtually, its first governmental sovereign green bonds offer in the London Stock Exchange (LSE) with a total worth of $750 million in a five-years term, the first of its kind in the Middle East and North Africa (MENA).

The move represents a historic moment in UK-Egypt relations, and UK-regional relations, UK Minister of State for Middle East and North Africa James Cleverly said, adding that more ambitious action is needed for the sake of protecting the environment, and attaining green and flexible recovery from the ongoing Covid-19 crisis.

LSE interim CEO Denzil Jenkins said that the launch reflects Egypt’s commitment to building a sustainable future and paves the way for bond issuers in the region to follow in Egypt’s footsteps.

For his part, Egypt’s Minister of Finance Mohamed Maait stated that joining the group of green bond issuer countries is critical for Egypt as this kind of investment is the driver of green development in the region.

Maait highlighted heavy investor demand on purchasing Egypt’s first green bonds that encouraged the ministry to reduce the interest rate on such bonds by 0.5 percent (50 bps), to reach 5.25 percent, down from 5.75 percent, which reflects investor confidence in Egypt’s economic, financial and monetary conditions and the country’s commitment to sustainable development policies.

Maait added that green bonds revenues will be used in financing eco-friendly green projects, achieving the country’s sustainable development plans in clean transport, renewable energy, reducing population, adapting to climate change, uplifting energy efficiency, in addition to applying sustainable development protocols to water resources and sanitation in light of Egypt’s Vision 2030.

Egypt’s green bonds managed to attract 16 new investors from Europe, the US, East Asia and the Middle East with 47 percent, 41 percent, six percent, six percent respectively, in terms of asset managers, investment and insurance funds, pension funds and high-quality banks that keep their investments over longer terms, which limits prices fluctuation, according to a finance ministry statement.

“The UK is proud to see the first Egyptian green bond included in the LSE, which is a sign of bilateral cooperation between Egypt and the UK in fighting the negative impacts of climate change and it is a reflection of mutual objectives between the two countries concerning adapting with the climate while looking forward to the 2021 United Nations Climate Change Conference (COP26) that will be held in cooperation with Italy in Glasco by November 2021,” said British Ambassador in Egypt Geoffrey Adams.

The World Bank is expected to extend the required technical assistance for preparing and issuing annual reports regarding the utilisation of Egypt’s green bonds revenues and the expected developmental and environmental effects of approved projects.

The green bonds issuance is a chance for Egypt to tap into sustainable finance instruments, adding that global green investments are expected to raise to $225 billion by end of 2020, up from $175 billion, according to the finance ministry.

In September, Egypt took its first action in this regard, issuing green bonds in the Egyptian market.

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