Ministries of investment, finance meet with CBE to discuss activation of secondary bond market

Investment Ministry and EFSA form joint committee to reduce fees for listing companies' in EGX, says Salman

The Investment Ministry held a meeting with the Ministry of Finance and the Central Bank of Egypt (CBE) to discuss the activation of the secondary bonds market in the Egyptian Exchange (EGX) within in a period ranging between two and three weeks, according to Minister of Investment Ashraf Salman.
Salman told Daily news Egypt that the government seeks to support the non-banking finance sector throughout the upcoming period and finance governmental project through non-banking finance alternatives.
The government is reconsidering the fees of listing companies in the Egyptian Exchange (EGX) in cooperation with the Egyptian Financial Supervisory Authority (EFSA), which is preparing a new study to decrease fees to encourage companies to trade in the EGX during the upcoming period.
A joint committee was formed between the ministry and EFSA to prepare new proposals for reducing listing fees, whereby fees will not exceed EGP 500,000 annually. This comes in preparation for presenting the proposal to the parliament for approval.
Former interim president Adly Mansour issued a decree amending certain items of the capital market law, in which the listing of securities is estimated at 0.002% of the value of the company's capital with an annual maximum of EGP 500,000 instead of only EGP 50,000.
Salman said the government plans to find new untraditional non-banking financing alternatives, whereby it has launched steps towards the activation of Sukuk (Islamic bonds) to utilise them during the upcoming period. It is also considering increasing the capital of its affiliated companies through the EGX, but "this matter is fundamentally dependent on the market's situation", he said.
The ministry is moreover seeking to activate Sukuk internationally, in conjunction with the government's interest in activating Sukuk locally. He expected the finance ministry to finalise the decision for the issuance of Sukuk and present it to the parliament within three weeks.
The government's previous plan to propose state projects through initial public offering (IPO) in the EGX depends on the stock exchange's depth and the return of dollar trades, which range between $700m and $800m. "We will not consider financing our national projects though IPOs because they will be offered mainly to the private sector," Salman said.
In terms of the government's plan to launch the second portion of the dollar bonds, it depends on whether the global economic situation improves. "We cannot predict the launching time with the slow growth in 90% of the world economies. Launching is dependent on improving the situation," he said.
The government offered dollar bonds worth $1.5bn in mid-2015 in the Luxembourg stock exchange, as part of a long-term plan to offer dollar bonds with a total value of $10bn.
In a related context, Salman said the Saudi-Egyptian Coordination Council will hold a meeting on 25 February to discuss the activation of the memorandum of understanding (MOU) for direct investment, as well as contracts to export petroleum products.
The Egyptian cabinet delayed the fifth session of Egyptian-Saudi Coordination Council scheduled to be held on 10 February in Riyadh, without providing reasons for the delay.
The government seeks to restructure all public enterprise sector companies and make use of their unexploited assets. The ministry has many alternatives to finance restructure plans, including registering companies in the EGX. "Each financing alternative has its cost and we are studying all the alternatives," he said.
Salman said the ministry is concentrating on public sector companies to determine the companies that can be offered on the EGX, and will identify all the companies ready for offering in three months.
The ministry signed a contract to prepare a study for restructuring 25 textile companies with Warner Asset Management. It is scheduled to start the development plan immediately after the initial report of the study is released in three months.
Regarding the dispute between General Authority for Investment and Free Zones (GAFI) and a number of relevant parties regarding the activation of the Investment Guarantees and Incentives Law, Salman said the ministry seeks to cooperate with all parties to offer their lands for sale in accordance with the law and the single-window system.
"The law requires everyone to abide by the single-window system, which allows several alternatives for the allocation of land, whether beneficial occupancy, ownership, participation of revenue with the relevant parties, or participation in profits," Salman said. "It also cancelled the bids that caused the high prices of real estate and industrial land."
The Ministry of Investment's goal is to conduct due diligence studies for all the lands. The ministry also does not interfere in land pricing. The responsibility for pricing falls under the jurisdiction of General Authority of Government Services, General Authority of Survey, New Urban Communities Authority, and supreme committee of land valuation.
The valuation of lands through one of the four authorities identified by the state is the most important step in the clauses of the law governing lands.