The Financial Group for Securitization will be the first in Egypt to securitise future flows on behalf of the Cairo for Investment and Real Estate Development (CIRA), following the Financial Regulatory Authority’s (FRA) approval of the multi-issuance programme.
CIRA plans to issue EGP 2bn worth of securities backed by future tuition revenues over the course of three years. The first issuance of the programme will see the company sell EGP 800m worth of bonds to financial institutions and other institutional investors.
Mohamed Omran, the Chairperson of the FRA, said that the new future flow securitisation programme will be the first of its kind as per the Law No. 13 of 2022 issued in March. This law added new articles for organising the issuance of securitised future flow bonds to the Capital Market Law No. 95 of 1992.
He added that this step comes within the framework of implementing the authority’s strategy to develop non-banking financial activities (2026-2022), and the efforts made in developing financing tools in the Egyptian market.
According to Omran, the new amendments allowed the existing authorities in many sectors, utilities, and public services in the country to provide the necessary financing through the proceeds of bonds.
The first issuance of securitised future flow bonds comes only four months after the approval of the legislation regulating such financing tools, which reflects the market’s desire to use new mechanisms, in light of the increasing trend internationally to rely on the securitisation mechanism. It is the main funding tool for public and private legal persons in many developed countries, having contributed in economic and infrastructure reform programmes.
The volume of securitization bond issuances during 2020 exceeded EGP 24bn, and amounted to EGP 18.8bn in 2021, which means that the volume of securitization bond issuances in the Egyptian capital market in the last two years exceeded EGP 43bn.