Egypt makes headway on green bond investment

Green bonds are a type of fixed-income designed specifically for environmental and climate projects.
Monday 18/05/2020
Mohamed Omran, chairman of the Egyptian Exchange. (Reuters)
Mohamed Omran, chairman of the Egyptian Exchange. (Reuters)

LONDON - Egypt's Ministry of Finance has begun procedures to provide intergovernmental green bonds, the first of their kind in the MENA region.

Green bonds are a type of fixed-income designed specifically for environmental and climate projects.

The plan to issue the bonds was spearheaded by Mohamed Omran, chairman of the Egyptian Financial Regulatory Authority (FRA) last November.

Omran announced at a conference at the time that the FRA would be offering a 50% discount on green bond insurance examination and studying to encourage investment. That means issuers will be given a 0.025% reduction for private offerings and double that (0.05%) for public offerings.

The FRA’s conference, aimed at creating a green project taxonomy, was attended by Sherif Elwy, CEO of Arab African International Bank, Mostafa Gad, co-head of EFG’ Hermes Investment Banking Division and Paul Antaki, founder and CEO of Premium International for Credit Services.

Egyptian Finance Minister Mohamed Ma’it said the bonds are aimed at strengthening investment in the state’s green projects. He added that HSBC, Credit Agricole, Deutsche Bank and Citibank had been chosen to promote the issuance, with the former two also brought on as structural advisers.

Also invited to the conference were representatives and officials of regional and international environmental organisations.

With the largest population in the MENA region, Egypt’s steps towards sustainable investment are an important development that advocates hope could trigger a domino effect in other nearby countries such as Tunisia, which has also held discussions on green bond integration.