Egypt plans to issue first tranche of $504m sukuk

Egypt is reportedly planning to issue the first tranche of the EGP25 billion ($504 million) local sovereign sukuk issuance in the third quarter of 2025.

The Ijarah sukuk will be issued to test the market and gauge investor appetite, followed by remaining tranches, Ashraq News, an Arabic financial portal, reported quoting three unnamed government officials.

Ijarah sukuk involves leasing assets to sukuk holders in exchange for rental income derived from those assets.

The government issued its first Ijarah sukuk in March 2023 by transferring government assets to a special purpose vehicle and leasing back the assets to the state in line with sharia law.

The financing costs of local sukuk are relatively lower than bonds and help attract new segments of investors, the sources said.

The sukuk maturities range from 3 years to 10 years, the report said.

Egypt’s financial needs increased by nearly a quarter year on year to EGP3.6 trillion for the next fiscal year, which begins in July.

The local offering comes as the government plans to issue $1 billion in sukuk in a private placement to Kuwait, the report said.

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Last month the International Monetary Fund (IMF) said the Egyptian government should in particular move forward with plans to sell state assets and work towards “decisively reducing the role of the public sector in the economy.”

The IMF and Egypt entered a four-year agreement in December 2022 that was slated to yield $3 billion of loans for the struggling nation.

That commitment was increased to $8 billion in March 2024 as currency volatility and disruptions to Suez Canal shipping further destabilised the Egyptian economy.