Egypt Sets a Milestone with Africa's First Panda Sustainability Bond Worth 3.5 Billion RMB

Egypt has successfully issued a 3-year Sustainability Panda Bond valued at RMB 3.5 billion (approximately $478.7 million).

This groundbreaking achievement makes Egypt the first African nation to tap into the Chinese debt capital market through a Panda bond, highlighting the nation's dedication to unlocking new sources of capital for fostering economic growth.

The issuance received essential backing from the African Development Bank and the Asian Infrastructure Development Bank, both of which provided partial credit guarantees to facilitate the process.

These guarantees not only drew in investors but also secured favorable terms for the transaction.

Typically, Panda bonds are issued in China's domestic capital market by foreign entities, often governments or corporations, and are denominated in Chinese yuan.

Lead underwriter and bookrunner for this historic endeavor was the Bank of China Limited, with support from HSBC Bank (China) Company Limited.

Egypt's intended use of the bond's proceeds aligns with its Sovereign Sustainable Financing Framework, which was introduced ahead of the COP27 climate conference held in Egypt the previous year.

The framework seeks to drive sustainable development by focusing on areas such as clean transportation, renewable energy, energy efficiency, sustainable water and wastewater management, financing for micro, small, and medium-sized enterprises, and essential health services initiatives, among others.

Dr. Mohamed Maait, Egypt's Minister of Finance, expressed the significance of this achievement, stating, "Egypt is the first African sovereign to issue Panda Sustainable Bonds in the Chinese Financial Markets. This is a historical move not just for the country but for the entire continent. We have paved the way for alternate, sustainable financing for our African neighbours and have deepened the partnership with our Chinese counterparts. It’s more than just a financing source; it’s a testimony of how important our economic and financial ties are with the Government of China."

The issuance received praise from Mohamed El Azizi, African Development Bank Director General for North Africa, who described it as groundbreaking. He noted, "This first Panda bond issuance by an African sovereign is the perfect example of how African Development Bank Regional Member countries could leverage the Bank’s AAA credit rating to penetrate new markets and mobilize sustainable financing at competitive terms from international investors."

Egypt has a track record of entering sustainable bond markets, having issued a green bond in 2020, making it the first country in the Middle East/North Africa region to do so.

In 2022, Egypt made history again by becoming the first African and Middle Eastern country to access Japanese capital markets, issuing a Samurai bond worth 60 billion Japanese yen (equivalent to around $500 million).

Ahmed Attout, African Development Bank Acting Director for Financial Sector Development, emphasized Egypt's commitment to facilitating access to sustainable financing on a broader scale across the continent.

He stated, “Egypt’s Panda Bond transaction shows our unwavering commitment to deepen the continent’s access to sustainable financing at scale, which to date is very small. While Egypt may be the first African nation to issue on the Panda Bond Market, it won't be the last, as we stand ready to support RMCs to mobilize new development financing at scale on both local and international capital markets.”

Egypt's Sovereign Sustainable Financing Framework closely aligns with the African Development Bank Group's country strategy for Egypt and its High-5 operational priorities, underscoring the nation's dedication to driving sustainable growth and development.

Source: African Development Bank Group