Approval has been granted by the Board of Directors of the African Development Bank (AfDB) Group for a partial credit guarantee of $345 million (equivalent in Renminbi) to Egypt. This guarantee will assist Egypt in accessing the Panda bond market, enabling the country to finance environmentally friendly and socially beneficial projects.
Through the utilization of the Panda Bond market, which involves foreign borrowers issuing bonds denominated in Chinese yuan, Egypt can raise approximately $500 million. The funds obtained from these bonds will be allocated to various sectors, including clean transportation, renewable energy, energy efficiency, sustainable water and wastewater management, financing for micro, small, and medium-sized enterprises (MSMEs), and essential health services initiatives. These sectors are given priority under Egypt’s Sovereign Sustainable Financing Framework (SSFF).
Dr. Rania A. Al-Mashat, Egypt’s Minister of International Cooperation, expressed that the agreement with the African Development Bank expands the strategic partnership, with a focus on promoting the transition towards renewable energy and financing sustainable infrastructure projects. The issuance of international bonds in the untapped Panda bond market, supported by the AfDB, helps diversify sources of financing and builds upon previous efforts such as the green bonds launched in 2020.
Dr. Mohamed Maait, Egypt’s Minister of Finance, conveyed appreciation to the African Development Bank for their consistent and unwavering support of the Egyptian economy, demonstrating confidence in Egypt’s economic performance and reflecting the longstanding cooperation between Egypt and the bank. Maait emphasized that this significant step, leading to the issuance of a Sustainable Panda bond in the Chinese financial market, opens up new opportunities to achieve strategic goals, explore new markets, broaden the investor base, and realize Egypt’s vision for 2030. He also emphasized the crucial role of regional and multilateral development banks in financing the development needs of developing countries, particularly in Africa, and urged partners to expand and facilitate the terms of this role.
Mohamed El Azizi, AfDB Director General for North Africa, described the approval as a historic moment, as Egypt will be the first African country to issue a Panda bond. He expressed the bank’s pleasure in supporting Egypt’s access to this market, noting that the partial credit guarantee will enhance Egypt’s credit rating and attract financing from international investors on competitive terms and pricing.
Egypt has been actively involved in sustainable and green bond markets since 2020 when it issued the first green bond in the Middle East and North Africa region. In 2022, prior to the COP-27 conference, Egypt introduced the Sovereign Sustainable Financing Framework to reaffirm its commitment to utilizing various instruments for financing green projects. Alongside green bond issuances, these instruments include sustainable, social, blue, sukuk, and other debt instruments. The framework outlines procedures and rules for resource use, project selection, monitoring, and evaluation in accordance with international best practices.
Ahmed Attout, AfDB’s Acting Director for Financial Sector Development, stated that the bank’s support will play a counter-cyclical role in assisting Egypt with this transaction, particularly during periods when international investors are averse to African capital market debts. A successful Panda bond issuance through the bank’s partial credit guarantee by Egypt will pave the way for other regional member countries seeking to diversify their funding sources and access the international debt capital market.
The project aims to foster inclusive growth and advance Egypt’s green and social objectives. The sectors outlined in the Sovereign Sustainable Financing Framework closely align with the bank’s country strategy for Egypt and its High-5 operational priorities.
