MILESTONE | Egypt Issues Africa’s First Chinese Yuan-Denominated Bond Worth 3.5 Billion RMB

Egypt has successfully issued a 3-year Sustainability Panda Bond worth RMB 3.5 billion ($478.7 million), making it the first African country to achieve such a feat.

“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,” said Dr. Mohamed Maait, the Egyptian Minister of Finance.

The African Development Bank (AfDB) and the Asian Infrastructure Development Bank extended partial credit guarantees to facilitate the issuance, AfDB said. This is seen as a step creating opportunities for other African nations to tap into the rapidly expanding Chinese debt capital markets.

The dual guarantees from these two highly-rated multilateral development banks played a pivotal role in attracting a broader pool of investors and ensuring favorable terms for the transaction. The Bank of China Limited, with support from HSBC Bank (China) Company Limited, was the lead underwriter and bookrunner.

Panda bonds are issued in China’s domestic capital market by foreign issuers, typically governments or corporations, and are denominated in Chinese Yuan.

Egypt, which was accepted to join the BRICS economic bloc in August 2023 will use the bond proceeds for inclusive growth and green objectives under its Sovereign Sustainable Financing Framework, AfDB said.

The country had sought to join BRICS as a way of cutting reliance on the dollar, and its parliament gave the green ligtht to join BRICS development bank in March 2023.

“Due to the war in Ukraine, we in Egypt have been suffering from a severe shortage of foreign exchange, particularly US dollars, to meet our import needs. This agreement comes to reduce demand on the US dollar and opens new horizons of economic cooperation with a big economic bloc like the BRICS group,” an Egyptian legislator said at the time.

The New Development Bank, established by the BRICS group of emerging economies, also hit another milestone in 2023 after successfully raising 1.5 billion ZAR (equivalent to $79 million) in its inaugural South African bond issuance in August 2023.