Egypt’s Ministry of Finance announced, on Tuesday, that it has sold $750m in five-year green bonds at a yield of 5.25%.
The sale represents the first sale of such bonds by a government in the Middle East and North Africa (MENA) region.
Minister of Finance Mohamed Maait said that the issuance witnessed a positive investor turnout, and was 7.4 times oversubscribed compared to the initial target of $500m. He also said that it was five times oversubscribed compared to the accepted bids.
The minister added that the issuance attracted a new base of investors in Europe, the US, East Asia, and the Middle East, at rates of 47%, 41%, 6%, and 6% respectively.
It also attracted investors, including asset managers, pension funds, insurance and investment funds, and banks representing 77%, 9%, 8%, respectively. This segment is classified as high-quality, due to their long-term retention of investments, which leads to a reduction in price fluctuation.
Maait revealed that the offering attracted $3.7bn worth of bids, leading the Ministry of Finance to sell the notes at about 50 basis points lower than the 5.75% yield that was initially marketed.
He said that this reflects the increasing demands on international green bonds that Egypt is offering for the first time in its history. It also confirms the increasing investor confidence in the country’s economic, financial and monetary conditions, in addition to the confidence in its future and commitment to sustainable development policies.
“For the first time, we succeeded in reducing the pricing margin to reach a negative new issue premium of 12.5 basis points,” Maait said.
He indicated that the proceeds of the green bonds will be used to finance expenditures related to environmentally friendly green projects. Finance will also be pumped into achieving a sustainable development plan covering clean transportation, renewable energy, reducing and controlling pollution growth, and adapting to climate change.
There will also be finance provided for raising Egypt’s energy efficiency, and the sustainable management of water and sanitation, in light of Egypt Vision 2030 which gives priority to green investment projects.