Egypt issues $1B sukuk to Kuwait Finance House

Egypt issued $1 billion in three-year Islamic bonds (sukuk) to Kuwait Finance House (KFH) last week, marking the second sovereign dollar-denominated debt instrument sold this year, a source in the Ministry of Finance told Al Manassa on condition of anonymity.

The settlement is expected by the end of this week, the source added.

According to them, the sukuk are backed by plots of land recently allocated to the finance ministry on Egypt’s Red Sea coast, specifically in the city of Ras Shukeir.

“Egypt will begin infrastructure work in Ras Shukeir soon to prepare for development and tourism projects benefiting Kuwait,” the source said.

The deal follows a Eurobond sale in January as Egypt attempts to regain access to international debt markets amid global monetary tightening.

Earlier this month, President Abdel Fattah El-Sisi issued a decree allocating about 41,500 feddans—or more than 174 million square meters—of Red Sea land to the Ministry of Finance to support sovereign sukuk issuances and reduce public debt.

According to the source, the sukuk will yield a semiannual return of up to 8% over their three-year term. The government’s first sukuk issuance in 2023 came with a significantly higher yield close to 11%.

They added that the transaction is part of ongoing negotiations between Egypt and Kuwait to deepen financial cooperation and secure concessional funding for development projects in Egypt’s national budget.

They also noted that this issuance is a form of sovereign debt but structured as Islamic sukuk compliant with Sharia law—an instrument that has gained widespread acceptance in Gulf markets, particularly in Kuwait.