Raya Holding executes first EGP 500m securitisation

30 Oct 2019

Raya Holding for Financial investment announced on Tuesday that three subsidiaries, Aman for Financial Services, Aman for Microfinance, and Raya Electronics, will issue secularization bonds, with a total value of EGP 500m.

The Commercial International Bank – Egypt (CIB) acted as financial adviser and general coordinator for the issuance process, in addition to its role as guarantor of the initial public offering (IPO) coverage of the secularization process in cooperation with the National Bank of Egypt (NBE) as underwriter.

Dreny & Partners law firm also acted as the legal adviser for the issuance process, while Ernst & Young acted as the auditor for the issuance process.

The issue comprises of four different segments in terms of size and term, three of which are short-term with maturity dates of six, nine, and twelve months, and the fourth tranche has a medium-term maturity date of 36 months.

The weighted average coupon yield due to bondholders is about 12.7%.

The issuance made a combined accounting profit of EGP 36.2m for the three issuers of securitization bonds.

The issuance is the first of its kind in the Egyptian market for securitization of the portfolio of microfinance and consumer finance for the Egyptian consumer.

The weighted average of default and historical default in the loan and financing portfolios of the three issuers is less than 3% as a whole.

As a result, this issue has been awarded a prestigious credit rating of “Prime 1”, which is the highest credit rating for short-term maturities, and “A-” for the medium-term tranche, which will be dissolved within 36 months by Middle East Rating & Investors Service (MERIS), the regional partner of Moody’s International Services.

Chairperson and Managing Director of Raya Holding, Medhat Khalil, said the successful completion of the initial securitisation process in the group’s history is an achievement of its kind, which included two relatively newly established companies, Aman for Financial Services and Aman for Microfinance.

He added that the launch of securitisation bonds is one of the efforts to enhance the market position and competitiveness of both Aman for Financial Services and Aman for Microfinance in the local market, which has been growing rapidly since their inception in 2017 and 2018, respectively.

CEO and Board Member at the CIB, Hussein Abaza, said that the bank is at the forefront of national institutions supporting efforts to achieve financial inclusion for all segments of Egyptian citizens.

“Therefore, we have been keen to coordinate and participate in this issue with Raya Holding as the company’s investment vision in the field of non-banking financial services is consistent with our financial inclusion objectives,” he added.

Vice Chairperson of the National Bank of Egypt (NBE), Yehia Aboul Fotouh, explained that the issuance of Raya Group bonds comes in line of the NBE’s interest in supporting and promoting micro finance projects.

“The launch of securitization bonds is an important part of our commitment to generate sustainable funding sources that will strengthen our financial position in the coming period,” said Head of Financial Sectors at Raya Holding, Hossam Hussein.

Hussein added that the company aims to establish a new securitisation process worth EGP 700m in the next year.

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