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CAIRO, June 9 (Reuters) - Egypt's financial regulator wants to introduce covered bonds and non-rated bonds to expand financing options for real estate developers and small- and medium-sized enterprises (SMEs), the body's chairman said on Tuesday.
Sherif Samy told Reuters the regulator would submit the proposal to the government this month, but declined to comment on the anticipated size of the market in the two new bonds categories.
Encouraging trade in bonds is a key part of the Egyptian Financial Supervisory Authority's (EFSA) plan to repair capital markets after years of political and economic instability since an uprising in 2011.
More corporate issuance would give companies an important channel to raise funds for investment. At present, over 90 percent of bond issues in Egypt are by the government.
Covered bonds are supported by cash flows from mortgages or public sector loans with an underlying asset pool that provides additional credit cover beyond the standard corporate bond. Non-rated bonds are securities that have not received a credit rating.
"We believe in addition to securitisation it's a good addition to companies, predominately for real estate. It gives an extra guarantee," Sami said of covered bonds on the sidelines of a business conference in Cairo.
He said some government entities in the real estate sector could benefit from the new instrument.
Sami said the non-rated bonds for SMEs would be restricted to financial institutions and investment funds and would not be available to the public.
EFSA approved in November the country's first law regulating microfinance services in an effort to create jobs and help entrepreneurs.
(Reporting by Stephen Kalin; Editing by Robin Pomeroy) ((stephen.kalin@thomsonreuters.com; +20 22 578 3290; Reuters Messaging: stephen.kalin.thomsonreuters.com@reuters.net))
Keywords: EGYPT BONDS/
Sherif Samy told Reuters the regulator would submit the proposal to the government this month, but declined to comment on the anticipated size of the market in the two new bonds categories.
Encouraging trade in bonds is a key part of the Egyptian Financial Supervisory Authority's (EFSA) plan to repair capital markets after years of political and economic instability since an uprising in 2011.
More corporate issuance would give companies an important channel to raise funds for investment. At present, over 90 percent of bond issues in Egypt are by the government.
Covered bonds are supported by cash flows from mortgages or public sector loans with an underlying asset pool that provides additional credit cover beyond the standard corporate bond. Non-rated bonds are securities that have not received a credit rating.
"We believe in addition to securitisation it's a good addition to companies, predominately for real estate. It gives an extra guarantee," Sami said of covered bonds on the sidelines of a business conference in Cairo.
He said some government entities in the real estate sector could benefit from the new instrument.
Sami said the non-rated bonds for SMEs would be restricted to financial institutions and investment funds and would not be available to the public.
EFSA approved in November the country's first law regulating microfinance services in an effort to create jobs and help entrepreneurs.
(Reporting by Stephen Kalin; Editing by Robin Pomeroy) ((stephen.kalin@thomsonreuters.com; +20 22 578 3290; Reuters Messaging: stephen.kalin.thomsonreuters.com@reuters.net))
Keywords: EGYPT BONDS/
