Egypt - The Financial Regulatory Authority (FRA) is considering new amendments to the Capital Market Law that would make it easier for small and medium-sized enterprises (SMEs) to issue sukuk, or Islamic bonds, in the local market.

According to sources who spoke to Daily News Egypt, the FRA may exempt SMEs from obtaining a credit rating for their sukuk issuances, as long as they follow the governance standards set by the authority. The sources said that this would reduce the cost and time of issuing sukuk, which is one of the most expensive stages in the process.

The sources also said that the FRA may waive the credit rating requirement for sukuk programs that are less than one billion pounds in value, adding that the aim of these amendments is to increase the volume and diversity of sukuk issuances in the Egyptian market.

The FRA’s interest in facilitating sukuk issuances comes after Prime Minister Mostafa Madbouly issued a decree earlier this week to amend some provisions of the executive regulations of the Capital Market Law. The amendments included allowing the issuance of a sukuk program in multiple tranches within three years, without needing the FRA’s approval for each tranche, creating and regulating sustainable development investment funds, and expanding the scope of work of traded funds.

The amendments also allowed the issuance of sukuk without a credit rating for the issuer or the beneficiary in certain cases, according to the criteria set by the FRA’s board of directors. This would give more flexibility and lower the cost of issuing sukuk for economic entities that wish to develop their business and expand by using this alternative financing tool.

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