Aggregated News From Investment Management Regulators

During a joint workshop with The European Bank for Reconstruction and Development (EBRD): FRA brings together companies and entities that may issue short-term bonds and eligible investors around one table

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• Dr. Omran: FRA’s decision specifies the companies and entities that may issue short-term bonds
• Dr. Omran: We have obliged Lead Manager to check the capital adequacy of natural persons who subscribe

Dr. Mohammed Omran – FRA’s Chairman inaugurated the joint explanatory session between FRA and the European Bank for Reconstruction and Development (EBRD). The session aimed at creating public awareness in the Egyptian market of the new short-term debt instruments.  The session included a presentation of the regulatory and legislative framework prepared by the Authority. Many parties participated in the workshop namely; entities qualified to issue such bonds, eligible investors and entities operating in the field of securities and licensed by the Authority to promote and cover the subscription, these entities are responsible of checking the capital adequacy of the natural persons who make the subscription.

FRA’s Chairman stated that 2018 was a “distinguished” year in the Egyptian capital market. He added that 2018 witnessed the issuance of amendments to the Capital Market Law and its Executive Regulations, which facilitated the issuance of short-term debt instruments using short procedures through a decision by the company’s Board of Directors and by the mandate provided by the General Assembly.

Also, Dr. Omran added that FRA’s BOD was keen to issue a decision regulating the rules and procedures for the issuance and offering of short-term debt instruments for a period not exceeding two years before the end of 2018. He states that FRA is awaiting the representatives of financial institutions participating with it to announce – soon – the first issuance of short-term debt securities to bear the fruit of the boom occurred in the legislations issued in the capital market. Accordingly, this will increase the efficiency and depth of the Egyptian capital market and will allow diversification in non-banking financial instruments traded in Egypt.

Dr. Omran introduced the most important rules governing the issuance of short-term debt instruments. He added that companies and entities wishing to issue short-term bonds must be complied to prepare financial statements for at least two financial years prior to the issuance in accordance with Egyptian accounting standards. These financial statements shall be accompanied by an auditor’s report prepared in accordance with the Egyptian auditing standards, noting that the said report shall be prepared by one of the auditors who are listed at FRA’s registry.

In the same context, Mr. Abdul Hamid Ibrahim, member of FRA’s BOD stressed that companies shall obtain a rating certificate issued by one of the Credit Rating Agencies accredited by the Authority or the guarantor may obtain it if any, provided that the minimum degree is not less than (BBB-) or equivalent, unless  the company is exempted from obtaining this Certificate.   On the other hand, Grading Certificate for Small and Medium Enterprises shall be submitted at the limit approved by the Authority.

In addition to representatives of the European Bank for Reconstruction and Development (EBRD), the workshop was attended by representatives of financial institutions eligible for private placement of short-term bonds; this includes banks under the supervision of the Central Bank of Egypt, insurance companies, public legal entities, insurance funds, pensions, private insurance funds and investment funds, this includes debt funds and money market funds within the permissible limits set in investment policy rules of these funds. Also, the workshop was attended by representatives of some investment banks that engaged in non-banking financial activity, the Egyptian Stock Exchange and the MCDR. 
 

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Regulator Information

Abbreviation: FRA
Jurisdiction: Egypt

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