Egypt's Financial Regulatory Authority (FRA) is allowing domestic companies to sell traditional and Islamic bonds — known as sukuk — without the need for a credit rating, according to an official statement made on Monday. The move aims to reduce the cost of listing and issuing bonds and sukuk, and encourage more Egyptian companies to access debt instruments to fund their expansion and investment plans.

This comes after Egypt issued its first ever sovereign sukuk on Feb 21. The three-year $1.5 billion Sharia-compliant debt issuance, which offers an annual profit rate of 10.875%, was four times oversubscribed. The issuance is part of a $5 billion three-year sukuk program that the Ministry of Finance established Feb. 14 and is listed on the London Stock Exchange.

Some 250 global investors including asset managers, pension funds, insurance companies and investment banks from the Gulf, Asia, Europe and the United States subscribed to the debt offering, according to a statement by Finance Minister Mohammed Maait.

Fakrizzaki Ghazali, fixed income manager at Riyadh-based SNB Capital, told Al-Monitor that Egypt's sukuk program will be "well-received" given the dearth of US-dollar denominated Sharia assets. "It will give investors more options to pick within the high yield sovereign [sukuk] market, in addition to Turkey, Bahrain, Oman and Sharjah,” he said.