China Eximbank, ICBC, and BoC provide $2.76 billion syndicated buyer’s credit for construction of Central Business Zone in New Administrative Capital

In 2014, Egyptian President el-Sisi proposed the construction of a New Administrative Capital (NAC) and identified this project as the ‘the locomotive of Egypt's future development.’ The project is part of a broader effort to switch Egypt’s capital city from Cairo to a brand-new constructed smart city called the NAC. The establishment of the NAC seeks to alleviate Greater Cairo’s increasing densification and establish a new growth hub for future generations. It will house Egypt’s 29 government ministries and contain 20 residential neighborhoods, an airport, hotels, malls, parks. Upon completion, it is projected to have enough space to accommodate 6.5 million inhabitants. In January 2016, the Egyptian Government and China State Construction Engineering Corporation Ltd. (CSCEC) signed a general contracting framework agreement regarding a project to construct the Central Business District (CBD) of the NAC. Then, on October 11, 2017, at a launch ceremony for the NAC Project, Egyptian Minister of Housing, Public Facilities, and Urban Development, Mustafa Mabdili, signed a general (commercial) contract worth $3,000,000,000 for the construction of the Central Business District (CBD) of the NAC with the Vice President of CSCEC, Zheng Xuexuan. The contract specifies that CSCEC is responsible for the construction of 18 high-rise towers (including administrative offices, hotels, entertainment facilities, and the tallest tower in Africa), which were organized into three batches and scheduled for financing via three separate loan tranches (all of which have reached financial close). Then, on April 28, 2019, a consortium of Chinese state-owned banks signed a $2.76 billion syndicated (buyer’s credit) loan agreement with the New Urban Communities Authority (NUCA) — an Egyptian Government authority affiliated with the Ministry of Housing — for the construction of the Central Business District (CBD) in the NAC. Participants in the loan syndicate include the Export-Import Bank of China (China Eximbank), the Industrial and Commercial Bank of China (ICBC), and Bank of China (BOC). ICBC is the lead arranger of the syndicated loan and it contributed $610 million to the syndicate. The borrower was to use the proceeds of the loan to finance 85% of the cost of the $3,000,000,000 commercial contract that was signed with CSCEC on October 11, 2017. The loan carried the following borrowing terms: a 13.5-year maturity, a 3-year grace period, and 2-3% interest rate. The Government of Egypt reportedly provided a sovereign guarantee in support of the loan. Sinosure provided $3.88 billion of buyer’s credit insurance (to cover the loan’s principal and interest). The Sinosure-covered project cashflow analysis reportedly accounted for projected apartment rental and sales, hotel & retail rentals, and centralized advertising revenues. The first tranche of the syndicated loan’s three tranches was worth $843,000,000 and it was earmarked for the construction of seven high-rise towers (5 residential and 2 commercial towers) in the CBD. Then, in July 2019, NUCA signed an agreement with eight Chinese banks (including ICBC) and HSBC Bank Middle East Limited to receive the second tranche of the loan (also known as the “Batch 2 Towers” Project). On December 24, 2020, the Egyptian Government announced that the third and final loan tranche would soon be disbursed and NUCA signed an agreement with seven Chinese banks (including ICBC, Bank of China, China Eximbank, China Construction Bank, Bank of Communications, Postal Savings Bank of China, and China CITIC Bank) to receive the third tranche of the loan (also known as the “Batch 3 Towers” Project). The first tranche was due to be disbursed in January 2020. However, on January 31, 2020, Al Monitor — an Egyptian newspaper — reported that the first tranche of the loan had not disbursed as expected in January 2020. According to the newspaper, the Egyptian government did not initially meet conditions attached to the loan facility and the Chinese bank syndicate was concerned about whether the Egyptian government could repay the loan. The CBD is located in the center of Egypt’s New Administrative Capital, 45 km east of Cairo. The CBD is expected to cover 505,000 m^2, and it include Africa’s tallest building at 385.8 meter named “Iconic Tower” (Arabic: البرج الأيقوني‎), 12 high rise commercial office buildings, 5 high-rise apartments, 2 hotels, and a total of 18 high rise buildings and municipal projects. CSCEC’s Eighth Bureau is the EPC contractor responsible for project implementation and it has reportedly provided direct employment opportunities for 5,000 workers, while indirectly employing 30,000 people. Dar al-Handasah Shair & Partners is responsible for architectural design and supervision. Project implementation commenced on May 2, 2018. On February 26, 2019, the foundation bottom slab concreting of the main building of the Iconic Tower was completed. In March 2020, the structural frame of the CO3 Office Building was completed and the first curtain wall body was installed for the C04 Tower (Commercial Building), which marked the beginning of the external curtain wall installation stage. Construction activities continued during the Covid-19 pandemic. On October 25, 2020, a topping-off ceremony was held for the 27-floor, C12 Tower (Commercial Building) Then, on June 17, 2021, a topping-off ceremony was held for the 385.8 meter, 80-storey Iconic Tower (which was planned and inspired by the shape of a pharaonic obelisk with glass exterior). CSCEC reported in 2021 that it had completed the construction of 13 buildings in the NAC, including the Iconic Tower (also known as the C03 Tower). As of September 2022, the project had completed the main construction of all 20 buildings and had entered the decoration and electromechanical installation stage. At that time, the project as a whole was expected to reach completion by the end of 2023. However, according to the terms of the commercial contract that was signed on October 11, 2017, the project was originally expected to reach completion within 43 months (by May 11, 2021).

Additional details

1. This project is also known as the construction of the Central Business District project of the NAC. The Chinese project title is 新首都中央商务区标志塔项目 or 埃及新首都中央商务区案例 or 在新首都项目 or 埃及新首都CBD项目 or 埃及新首都中央商务区标志塔项目 or 埃及新首都中央商务区项目 or 埃及新首都中央商务区项目 or 新首都中央商务区项目. The Arabic project title is لمشروع القطار الكهربائى السلام ـ العاصمة الإدارية. 2. Sinosure notes in its 2019 Annual Report that it provided $1.17 billion of credit insurance for the first batch for the construction projects (See Sinosure Annual Report 2019, pg. 33). This seems to be a reference to the first tranche of the loan (i.e. insurance cover for the first tranche of the loan’s principal and interest). 3. Some sources suggest that the face value of the loan agreement signed on April 28, 2019 was $2.76 billion and covered all three tranches. However, other sources (such as https://www.tagmydeals.com/Deals/DealData/11780?title=New-Urban-Communities-Authority-Sinosure-Covered) suggest that the agreement only committed funds for the first tranche. This issue merits further investigation. 4. One source suggests that the loan's second tranche (https://www.tagmydeals.com/Deals/DealData/11780?title=New-Urban-Communities-Authority-Sinosure-Covered) was worth $1.36 billion. This issue warrants further investigation. 5. On December 24, 2020, NUCA reportedly signed a “third loan agreement” with a syndicate of banks — including CBC, Bank of China, National Bank of Kuwait, Export-Import Bank of China, HSBC, Bank of Communications, Citic, China Construction Bank, and the Postal Savings Bank of China — for the construction of the Central Business District (CBD) of the New Administrative Capital Some sources (like https://www.tagmydeals.com/Deals/DealData/12986?title=Egypts-New-Administrative-Capital-Project-Sinosure-Covered-Loan) suggest that the face value of the loan agreement signed on December 25, 2020 may have been worth approximately $800 million, which suggests that the agreement was in fact an agreement for the third tranche of the $2.76 billion syndicated loan. This issue merits further investigation. 6. The loan’s interest rate is not documented by any official sources. However, Bloomberg reports that it is between 2% and 3%. Therefore, for the time being AidData has coded the interest rate as 2.5%. This issue merits further investigation. 7. The $2.76 billion syndicated loan that was issued in 2019 is not included in the database of Chinese loan commitments that SAIS-CARI released in July 2020. Nor is it included it in the China’s Overseas Development Finance Dataset that Boston University's Global Development Policy Center published in December 2020.

Number of official sources

28

Number of total sources

75