FRA approves licensing two companies to engage in securitization activity

Dr. Mohamed Farid Saleh, Chairman of the Financial Supervisory Authority, issued two resolutions No. 1580 and 1581 of 2022, regarding licensing the two companies Zila Securitization and Aman Securitization, to engage in the activity of securitizing financial rights, pursuant to the provisions of Law No. 95 of 1992 and its executive regulations and the decisions issued in implementation of them.

The Financial Supervisory Authority had announced the total value of stock and bond issuances in the stock market, which amounted to 57.7 billion pounds during the second quarter (April – June 2022), compared to 35.1 billion pounds during the same period last year, with a growth rate of 64%, and it was distributed among founding shares with a value of 6.1 billion pounds, compared to 9.3 billion pounds, a decrease of 34%, while the value of the capital increase shares rose to 44.2 billion pounds, compared to 25 billion pounds, a growth rate of 77%, and the value of securitization bonds reached 6.1 billion pounds, compared to 881 million pounds, a growth rate of 594%.

It is noteworthy that securitization is a financial process in which sukuk bearing the value of assets that generate a return are issued and then sold to investors, or it is converting long-term loan installments into bonds and selling them in the stock market with the aim of obtaining their value immediately upon issuance, allowing the issuing companies to provide liquidity that enables them to expand in Providing more loans without waiting for the installments to be repaid, and without charging its budget with financing expenses such as bank borrowing.

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