The African Development Bank (AfDB) Group’s Board of Directors has granted approval for a Partial Credit Guarantee of $345 million (equivalent in Renminbi) to Egypt. The guarantee aims to facilitate Egypt’s access to the Panda bond market, enabling the country to finance green and social projects.
By utilizing the Panda Bond market, which involves bonds denominated in Chinese yuan issued by foreign borrowers, Egypt can raise approximately $500 million. The proceeds from the 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 prioritized 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, focusing on promoting the transition towards renewable energy and financing sustainable infrastructure projects. The issuance of international bonds in the untapped Panda bond market, backed by the AfDB, helps diversify financing sources 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, showcasing confidence in Egypt’s economic performance and reflecting the long-standing cooperation between Egypt and the bank.
Maait highlighted that this significant step, leading to the issuance of a Sustainable Panda bond in the Chinese financial market, opens new avenues to meet strategic goals, explore new markets, widen the investor base, and achieve Egypt’s vision for 2030. He also emphasized the vital role of regional and multilateral development banks in financing the development needs of developing countries, particularly in Africa, and urged partners to expand and ease the terms of this role.
Mohamed El Azizi, AfDB Director General for North Africa, described the approval as historic, as Egypt will be the first African country to issue a Panda bond. He expressed the bank’s pleasure in supporting Egypt to access 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, ahead of the COP-27 conference, Egypt launched the Sovereign Sustainable Financing Framework to reaffirm its commitment to using various instruments for green project financing. In addition to 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 line 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 of international investor aversion 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 looking to diversify their funding sources and access the international debt capital market.
The project aims to promote 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.