North Africa

There is growing concern among African policymakers that indebted low income countries face growing risks of downgrades and even default because of a lack of coordinated support from public and private institutions.

The Arab Republic of Egypt — a frequent bond issuer — has signed its first syndicated loan. Egypt’s debut in the market, bankers said, is an attempt to diversify its funding to support an expanding state budget, just months after its debut green bond was delayed due to Covid-19. Mariam Meskin reports.

The Arab Republic of Egypt has secured its debut syndicated conventional and Islamic facility from a range of local and international lenders as it attempts to support the state budget, which has come under major pressure during the coronavirus crisis.

Tunisia, one of the latest emerging market countries to fall into the grips of crisis, is facing myriad problems following its prime minister’s shock resignation this week. Though the government has approached sovereign creditors for debt relief, some say it may have more trouble obtaining payment holidays on its existing bonds, as the private sector debt relief debate for emerging markets brews.

The European Bank for Reconstruction and Development (EBRD) sold the first Algerian dinar-linked bond from a development finance institution last week. With local market liquidity drying up because of the collapse in the price of oil, further demand for dinar assets could depend on how well the nation’s economy diversifies away from the industry.

Egypt’s debut green bond, which had been expected to come to market in the first half of the year, is on hold, according to sources. But although the coronavirus pandemic has impacted issuance for issuers such as Egypt, the green bond market is far from dead.

Emerging market bond issuance, particularly from the Middle East, has been recovering after the brutal March shocks of Covid-19 and low oil prices. Egypt took that momentum further on Thursday as it announced a triple tranche trade.

The Arab Republic of Egypt is set to become the first Middle East or North African sovereign to sell a green bond. But there are no “obvious suspects” for a follow-on deal, according to those in the market. While green bond issuance is taking root among the region's other borrower classes, the format has yet to grasp the attention of governments for whom, some say, the challenge of being greener is proving too great, writes Mariam Meskin.

The Arab Republic of Egypt has hired a group of international banks to arrange its debut green bond. Though the deal will be the first sovereign issue of its kind in the Middle East and North Africa region, it adds to a string of green issuance from corporates and banks, which are developing a taste for ESG-linked debt.

Saudi Arabian food and beverage producer Almarai has secured a $100m loan from the European Bank for Reconstruction and Development (EBRD) to support expansion in Egypt and Jordan.

Nabil Lahham has joined HSBC to head up advisory and corporate finance coverage for the Middle East, North Africa and Turkey. He was most recently at Perella Weinberg Partners.

The Kingdom of Morocco achieved savage price traction on its €1bn 12 year trade on Thursday, bringing in the yield on the trade by 40bp, to 1.6% and extending its curve.