Aggregated News From Investment Management Regulators

SMEs are allowed to issue short-term bonds – Monday 2/9/2019

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• Dr. Omran: granting licenses for SMEs credit rating agencies will provide alternatives for SME Finance

Dr. Mohammed Omran – FRA’s Chairman emphasized that FRA’s BOD approves licensing SME credit rating agencies in order to provide alternatives for SME Finance.

Dr. Omran said that the Board has initiated this regulatory step to provide SME finance through issuing different types of bonds, including medium-term bonds for capital assets financing and short-term bonds for working capital financing.

Dr. Omran noted that last year witnessed the issuance of amendments to the Capital Market Law – and it’s Executive Regulations – which facilitated the issuance of short-term debt instruments through brief procedures pursuant to a decision issued by the company’s BOD and authorized by the General Assembly. He added that the said amendments obliged companies or entities wishing to issue short-term bonds to obtain a credit rating certificate from accredited credit rating companies, with no less than a BBB- rating – or its equivalent, unless it is exempted from obtaining this certificate.  Credit rating certificate shall be submitted pursuant to the limit set by FRA.

FRA’s Chairman added that FRA’s BOD considered the importance of legalizing SME finance through different types of bonds and debt revenues.

It should be noted that within the framework of providing SME finance, Law No. 176 of 2018 was issued  to regulate financial leasing and factoring and activate these activities so as to provide SME finance. Since March 2018, the Egyptian collateral registry has been activated to enable SMEs to get funds on guarantee of their movable assets through an electronic system without the need to transfer the movable possession and the movable assets shall stay in the possession of the debtor. It is worth mentioning that publicity value is 520 billion EGP.

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Regulator Information

Abbreviation: FRA
Jurisdiction: Egypt

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