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Egyptian central bank 'unaware' of Islamic bonds programme

Governor of Egypt's central bank has said that he does not know about the Islamic bond programme worth $12 billion that will be issued by the government next year

Ahram Online and Reuters, Thursday 30 May 2013
Egyptian central bank
New Egypt Central Bank's governor, Hisham Ramez (Photo: Al-Ahram)
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Governor of Egypt’s Central Bank Hisham Ramez said that he is unaware of the government’s plans to issue Islamic bonds (sukuk) worth $12 billion by next year’s outset, reported Al-Ahram’s Arabic-language website on Thursday.

On Wednesday, Reuters reported that Egypt aims to issue sovereign Islamic bonds early next year, which could help ease pressure on its public finances.

Cairo has appointed HSBC Holdings and Qatar National Bank as joint lead arrangers and dealers for the programme, Reuters added.

Egypt's Islamist-led government is keen to develop Islamic finance and earlier this month, Egypt's President Mohamed Morsi approved a law allowing the state to issue Islamic bonds, ending a troubled passage for a bill the government hopes will help revive its flagging finances.

Last week, Egyptian marine services firm Maridive and Oil Services has obtained a $150 million syndicated loan using an ijara (Islamic leasing) structure, the first of its kind in Egypt.

In an ijara one party leases a specific asset to a client for an agreed rental price, but unlike an operating lease a lessor cannot charge interest on defaulted or delayed payments.

In addition, in an ijara the cost of acquiring the asset is usually not amortised during the leasing period, the lessor must own the assets for the full lease period and be responsible for bearing the maintenance costs of the asset.

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