Egypt’s Ministry of Finance has launched its first issuance of sovereign sukuk in the local market

Egypt’s Ministry of Finance has launched its first issuance of sovereign sukuk in the local market, with a value of EGP 3 billion and a three-year maturity, through the primary dealers system.

 

This comes as part of the government’s strategy to diversify financing sources, lower borrowing costs, and expand the investor base by attracting new investors and savers to government securities — particularly those seeking Sharia-compliant financial instruments.

 

The offering was oversubscribed by around five times, with the accepted yield coming at a lower cost compared to traditional bonds. The average yield stood at 21.56%, marking a decline of 26.2 basis points below the indicative yield of comparable traditional bonds issued last week at 21.82%.

 

The average yield was also 14.3 basis points lower than Treasury bonds issued on the same day with similar maturity, which recorded an average accepted yield of 21.703%.

 

The issuance was executed through the primary market via public auctions, with subscriptions received from 16 primary dealer banks in addition to four Islamic banks operating in Egypt: Faisal Islamic Bank, Abu Dhabi Islamic Bank, Al Baraka Bank, and Kuwait Finance House.

 

A general sovereign sukuk program structured under Ijara-based Sharia-compliant financing had previously been established for domestic issuances with a total program size of EGP 200 billion. Multiple sovereign sukuk issuances will be executed under this framework, with taxation and accounting rules aligned with those applied to government Treasury bonds.

 

This issuance reflects the Ministry of Finance’s ongoing efforts to broaden the investor base and reduce debt servicing costs. Sovereign sukuk issuances have been included in the Ministry's quarterly domestic issuance calendar, published on its official website.