The government announced that the Suez Canal project will be financed by investment certificates offered to the public, changing its original plan to rely on shares purchases as the financing tool. Ahmed El-Zahar, director of investment banking and corporate finance at Cairo Financial Holding (CFH), stated that investment certificates are closer to Islamic and conventional bonds. "The finance ministry will act as a guarantor to the Suez Canal Company, who would be responsible for paying the yields of the certificates' holders," El-Zahar said. El-Zahar explained that share issuance would have meant that citizens would be owners while the investment certificated would put citizens in the position of a creditor. "I believe the shift to investment certificates is a very smart idea because the time and regulations needed for shares' issuance is greater than that required for the certificates' issuance," El-Zahar said. Investment certificates will be offered to Egyptians only, El-Zahar said, adding that "dollar certificates will be available for Egyptians living abroad". Another banking expert however, said it would have been better for the government to issue shares. "Shares would be freely traded in the Egyptian stock market," he said. "The price of their issuance would be lower and has no return." The expert, who preferred to remain anonymous, said that "they [shares] would not place any pressure on the state budget having to pay the return." The expert stated that the problem lies with the canal's "dark history" with investors. "Following the 1952 revolution, late president Abdel Nasser nationalised the Suez Canal so the history of investment in the canal is not encouraging for investors," the banking expert said. "Investors would fear that something like that would repeat so it is better to issue investment certificate to lure investors," he added. On 10 August, Minister of Planning and Administrative Development Ashraf El-Araby said during a television interview that an increase in revenue from the Suez Canal project and its shares can be expected in two years. The minister stated that announcements on shares and bond purchases for Egyptian citizens would be made during the upcoming days. On Friday Governor of the Central Bank of Egypt Hisham Ramez said that Suez Canal investment certificate yields would be paid to certificate-holders from annual revenues, after one year of drilling the canal. The certificates will be issued through public sector banks over a period of five years. The certificates come with 12% interest rates. El-Zahar stated that this interest rate that is notably higher that the "10.5% interest rate available in the market". Digging the new expansions in the Suez Canal, the one-year project, will cost EGP24bn ($4bn).
