Egypt sukuk likely to be asset-based, not asset-backed

Egypt announced plans for sukuk in early 2014 in a recent bond offering document.  The description of how the sukuk would interact with standard clauses limiting secured bond issuance suggests that Egypt will eventually use an asset-based structure in contrast to talk earlier of the Egyptian government leading with an asset-backed issuance.  

Sukuk would provide a long-term source of financing in contrast to the shorter tenor offerings the government has used to finance the growing budget deficit since the revolution.  With an election near, it is unlikely this will change soon, but after the election the government will face pressure from investors to finalize an agreement with the IMF if it hopes to tap the longer-term markets with a sukuk.

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