APA – Cairo (Egypt) This is a first on the Black Continent and has been carried out with the support of the African Development Bank (AfDB) and the Asian Infrastructure Investment Bank (AIIB).
Egypt’s issue of 3.5 billion yuan ($478.7 million) worth of three-year Panda sustainable bonds has been crowned with success. The country of the pharaohs, pyramids and hieroglyphs “will use the proceeds of these bonds to achieve inclusive growth and sustainable development objectives under its Sovereign Sustainable Finance Framework,” says a press release from the African Development Bank (AfDB) received by APA on Wednesday.
Launched ahead of COP 27 in Sharm el-Sheikh last year, the framework targets sustainable development through investments in clean transport, renewable energy, energy efficiency, sustainable water and wastewater management, the financing of micro, small and medium-sized enterprises, and essential health service initiatives.
According to the ADB, “Egypt is the first country on the African continent” to issue sustainable Panda bonds on the Chinese financial markets. This move, it says, “underlines Egypt’s willingness to access previously untapped sources of capital to boost its economic growth.” “We have paved the way for alternative and sustainable financing for our African neighbours and deepened the partnership with our Chinese counterparts. More than just a source of financing, it is a testament to the importance of our economic and financial ties with the Chinese government,” Egypt’s Finance Minister Mohamed Maait said.
The African Development Bank and the Asian Infrastructure Investment Bank (AIIB), the source said, provided partial credit guarantees to support the issue, paving the way for other African countries to access China’s fast-growing debt capital markets.
Egypt pioneers the continent
“Panda bonds are issued in China’s domestic capital market by foreign issuers, usually governments or companies, and are denominated in Chinese yuan. The combined guarantees of the two multilateral development banks, rated triple A, helped to attract investors and ensure competitive terms for the transaction. With the support of HSBC Bank (China) Company Limited, Bank of China Limited acted as lead arranger and book runner,” the document continued.
Mohamed El Azizi, the AfDB’s Director General for North Africa, said that “this first issue for an African state is a perfect example of how the African Development Bank’s regional member countries could take advantage of the Bank’s AAA credit rating to enter new markets and mobilise sustainable financing on competitive terms from international investors.”
Back in 2020, Egypt became the first country in the Middle East/North Africa region to issue green bonds. Two years later, it became the first country in Africa and the Middle East to access the Japanese capital markets through a 60 billion Japanese yen (around $500 million) Samurai bond issue.
“Egypt’s issuance of Panda Bonds demonstrates our unwavering commitment to expanding the continent’s access to large-scale sustainable financing, which to date has been very limited,” said Ahmed Attout, Acting Director of the Financial Sector Development Department at the African Development Bank. “Egypt may be the first African country to issue a Panda bond, but it won’t be the last. We stand ready to assist regional member countries in mobilising new large-scale development finance on local and international capital markets,” he concluded.
ID/te/fss/abj/APA