Egypt's Ministry of Finance Issues EGP 5 Billion Sovereign Sukuk Amid Rate Cut

Egypt Proceeds with EGP 5 Billion Local Sukuk Offering

Egypt's Ministry of Finance is proceeding with the issuance of EGP 5 billion (approximately $104.8 million) in three-year local sovereign sukuk. The auction for this tranche is scheduled for Monday, December 29th, with settlement expected on Tuesday, December 30th.

This offering marks a significant event for the domestic debt market, as it follows a 100 basis point interest rate cut by the Central Bank of Egypt (CBE) last week. Market participants view this issuance as the first practical test of market pricing in the new rate environment.

Strategic Diversification and Market Impact

The sukuk is part of an ongoing series, carrying a fixed yield of approximately 21.224%. However, expectations are that the auction will reflect the recent monetary policy adjustments, particularly after the overnight deposit rate was lowered to 20 percent.

With the completion of this tranche, the total amount raised under Egypt's sovereign sukuk program will reach EGP 20 billion. The Ministry of Finance has set an ambitious target to cover total sukuk issuances of EGP 180 billion before the end of the current fiscal year 2025/2026.

Broader Financial Strategy

This issuance aligns with Egypt's overarching financial strategy to diversify its funding sources, reduce debt servicing costs, and broaden its investor base. The government aims to attract new segments of investors, especially those seeking Sharia-compliant financial instruments.

The local market program for sovereign sukuk has an overall capacity of EGP 200 billion. These instruments are structured under the Ijara (lease) model, adhering to Islamic law, and receive the same tax and accounting treatment as conventional government treasury bonds.

Previous Issuances and Investor Engagement

Egypt successfully launched its first local-currency sovereign sukuk on November 4, 2025, raising EGP 3 billion. This initial offering was notably oversubscribed by five times and was priced at an average yield of 21.56%. Subscriptions for previous issuances have seen participation from 16 primary dealer banks, alongside four key Islamic banks operating in Egypt: Faisal Islamic Bank, Abu Dhabi Islamic Bank-Egypt, Al Baraka Bank Egypt, and Kuwait Finance House-Egypt.