The Middle East’s First Sovereign Green Bond Sees Strong Demand
Egypt Offers the Middle East’s First Sovereign Green Bond
(Bloomberg) -- Egypt pulled in orders for nearly five times the $750 million size of the Middle East and North Africa’s first sovereign green bond, as it pushes ahead with anti-pollution and renewable energy projects.
The Arab world’s most populous nation sold the five-year notes at a yield of 5.25%, well inside an opening target of about 5.75%, after amassing more than $3.7 billion of investor orders. The sale “put Egypt on the map of sustainable financing,” the Finance Ministry said.
Among those attracted were a “new investor base from Europe, the U.S., East Asia and the Middle East, as well as asset mangers, pension, investment and insurance funds,” the ministry said in a statement. Such “high-quality,” long-term investors “will reduce price volatility.”
The bond forms part of Egypt’s strategy to lock-in new financing sources and broaden the country’s investor base, steps that could in turn help lower its borrowing costs. It#s touting a $1.9 billion portfolio of potential green projects, including clean transportation, renewable energy and sustainable water management.
Egypt joins a growing green bond wave with Tuesday’s sale, as global investor interest in cleaner financing surges. The assets of sustainable index mutual funds and exchange-traded funds have doubled to $250 billion in the past three years, according to Morningstar.
After a record Eurobond sale in May, Egypt is targeting as much as $7 billion in debt sales in the fiscal year that began in July. There are additional plans to offer the country’s first sukuk, or Islamic bonds, in both local and international markets.
Citigroup Inc., Credit Agricole SA, Deutsche Bank AG and HSBC Holdings Plc arranged Tuesday’s sale.
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