The African Development Bank (AfDB) has approved a partial credit guarantee of U.S.$345 million equivalent in Renminbi to Egypt to increase access to the Panda bond market to finance green and social projects.
Development Diaries reports that the fund allows Egypt to raise the equivalent of U.S.$500 million in the Panda bond market, which are bonds denominated in Chinese yuan issued by foreign borrowers.
Egypt generates 0.6 percent of the world’s greenhouse gas emissions. However, the country has taken numerous steps to cut emissions, including a goal to boost the proportion of renewable energy in the nation’s electrical mix to 20 percent by 2022 and 42 percent by 2035.
In a statement, the bank noted that the bond proceeds will be used for clean transportation; renewable energy; energy efficiency; sustainable water and wastewater management; financing for MSMEs, and essential health services initiatives.
Egypt’s Minister of Finance, Mohamed Maait, expressed his appreciation to the bank for their unwavering and continued support of the Egyptian economy.
He noted that it reflects deep confidence in the strength of Egypt’s economic performance and proves the outstanding and deep-rooted cooperation history between Egypt and the AfDB.
‘I believe that this step, leading to the issuance of a Sustainable Panda bond in the Chinese financial market, paves the way to explore new avenues to meet our strategic goals by entering new markets and widening our investor horizon, as well as achieving Egypt’s vision 2030 targets’, he said.
AfDB’s Director General for North Africa, Mohamed El Azizi, described the approval as historic.
He said, ‘Egypt will be the first African country to issue a Panda bond and, as the African Development Bank, it is our pleasure to provide support to Egypt to enable them to access the market.
‘This partial credit guarantee will enable Egypt to enhance its credit rating and catalyse financing from international investors on competitive terms and pricing’.
The bank noted that the project will promote inclusive growth and advance Egypt’s green and social objectives.
Photo source: AfDB
