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Corporate Green Bond Market in Egypt: Barriers to Market Development
Abstract Green bonds have risen as a crucial financial tool for mobilizing capital for environmentally sustainable projects, aiming to address climate change and promote sustainable development. In Egypt, despite being a pioneer in issuing sovereign green bonds, the corporate bond market remains in...
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| Format: | Thesis |
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AUC Knowledge Fountain
2024
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| Summary: | Abstract
Green bonds have risen as a crucial financial tool for mobilizing capital for environmentally sustainable projects, aiming to address climate change and promote sustainable development. In Egypt, despite being a pioneer in issuing sovereign green bonds, the corporate bond market remains in its early stages, with relatively low issuance of corporate green bonds compared to other emerging economies. This study focuses on identifying the challenges facing the domestic corporate green bond market. Through interviews with eleven market participants, the analysis revealed general challenges that encompass the entire bond market, including lack of awareness, limited engagement of retail investors, lengthy and complex issuance processes, high costs, challenges in the secondary market, and the impact of the current economic situation on the debt market. Additionally, specific challenges regarding the green bond market were identified. These challenges included insufficient awareness and mislabeling of green issuances, issuer unpreparedness and lack of internal capacity, absence of clear guidelines and local taxonomy, limited pool of eligible assets, high costs of verifiers and additional reporting requirements, regulatory constraints, and lack of incentives. The study concludes with a set of policy recommendations, including designing capacity-building programs for all market participants’, involvement of local verifiers to reduce third-party verification costs, and developing incentive packages for green bond issuers. |
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