Raya Holding for Financial Investments has announced the successful issuance of a second round of securitisation bonds in less than a year, at a value of EGP 562m.
The securitisation bonds were issued through receipts, financial rights, and future payment dues guaranteed by various guarantees by three of the group’s subsidiaries, namely Raya Electronics, Aman for Financial Services, and Aman Microfinancing.
In a statement to the Egyptian Exchange (EGX) on Monday, the company confirmed that it had obtained the necessary regulatory and legal approvals for the new offering. The proceeds include various electronic and home appliances instalments, in addition to car loans and small- and micro-projects.
The Commercial International Bank – Egypt (CIB) provided financial advice for the deal. It also subscribed to the subscription coverage for the securitisation process with the National Bank of Egypt (NBE), Banque Misr, Misr Capital Company, Attijariwafabank – Egypt, and the Suez Canal Bank (SCB).
The Derini & Partners law office provided the legal advice for the deal, alongside the United Office for Auditing, Taxes & Financial Consultations carrying out the financial audits on the deal. This comes in addition to Meyers Credit Rating Company, the regional partner of Moody’s International Investor Services Company, providing the credit evaluation services for the issuance.
The issue includes four segments, three of which are short-term with maturity dates of 6, 9, and 12 months, respectively. The fourth holds a medium-term maturity date of 36 months, with a relative average return of 10.78%.
The first tranche represents 33.7% of the issue value, with a return of 10.53%, and a maturity date after six months. The second tranche represents 25% of the issue, with a return of 10.68%, and a nine-month maturity date.
The third and fourth tranches represent about 28.5% and 12.8% of the issue and a return of 10.73% and 11.73%, respectively, alongside 12 and 36 months to maturity.
According to Raya Holding, banks covered the bonds’ underwriting of by nearly 300%. The issuance includes contracts of about 124,000 customers from the three companies, backed by over 800,000 documents, including receipts, bank checks, and bills.
Medhat Khalil, Chairperson and Managing Director of Raya Holding, said his company strives to maintain its leading role among private sector institutions in working to promote financial inclusion in the local market. He noted that, as part of this framework, he is pleased to continue growing business through various non-bank financial services providers.
Hossam Hussein, Head of Financial Sectors at Raya Holding, said the company views the issuance of securitisation bonds as a means of accelerating the growth of their non-bank financial services sectors. This is expected to occur through the continuous liquidation of growing lending portfolios across all three subsidiaries covered in this issue.
He explained that this mechanism indirectly provides companies with better financing alternatives, and allows them to develop their loan portfolios at a faster rate.
Hussein added, “We encouraged the Central Bank of Egypt decision to cut interest rates by 300 basis points earlier this year to follow up on the bond offering, as the cost of financing from these issues has become so attractive that they cannot be ignored. In the coming period, we will continue our efforts to generate sustainable financing.”