Bonds & Sukuk

Wepeak™ accurately determines the value of the Bonds & Sukuk. The studies are accepted by Egyptian Exchange (EGX), Egyptian Financial Supervisory Authority (EFSA) and other Authorities.

Wepeak™ prepares valuation studies according to Egyptian & International Financial Reporting Standards.The Valuation is based on revised financial models to achieve the accurate value with the least deviation.

The Bonds & Sukuk are not always publicly or actively traded, they are often not straightforward to appraise. So understanding the fair value of bonds or sukuk important for a variety of reasons.

Companies plan to issue bonds or sukuk at rates that are competitive in the market, potential investors aim to weigh the rate of return to determine the worthiness of the investment, deal-makers seek to understand the value of all assets and risks considered in a transaction, and investment portfolios report the value of bonds & sukuk to investors. Wepeak™ identifies trades of like instruments and examines their risk characteristics and trading trends to produce well-supported valuations.

Bonds & Sukuk are issued by many different entities including corporations, the government or municipalities. Regardless of who is issuing it, an issuer goal is to raise capital by issuing debt at a rate that is competitive in the marketplace.

Sukuk characterized by the application of Islamic Sharia and using of alternative models instead of ordinary interest rate which is used by bonds.

Once bonds & Sukuk have been issued, it may be traded publicly or privately. Valuation of bonds traded on a public market is seemingly very clear-cut; however, even these bonds must be analyzed to determine whether the volume of trades is sufficient to support a fair value of bonds in accordance with accounting guidelines. If the market is thinly traded or private, a different approach for bond valuations must be pursued.

There are two primary approaches to determining bond value: income and market approach.

  •  Income approach to bond valuations
    In the income approach, the present value of all future, anticipated cash flow is analyzed, and the riskiness of that repayment stream is also considered.

  • Market approach to bond valuations
    In this approach, Wepeak™ seeks out comparable bonds with similar risk characteristics and studies the discounts or premiums at which they are being traded, if any, and applies appropriate discounts or premiums to the debt being valued.

Wepeak™ surely understands the underlying factors that influence the valuation of bonds at issuance. We routinely consider aspects like the priority and voting rights of the holders and the creditworthiness, financial projections, outstanding debt and underlying asset base of the company issuing the bonds or Sukuk and their impact on the bonds or sukuk value.

The appraisal offers:

  • Well-supported and defensible independent opinion of value
  • A narrative of the history and nature of the company
  • A statement describing and explaining the purpose, scope, value definition and asset definition
  • Detailed industry and economic overviews
  • Comparable data points that analyze market conditions
  • A comprehensive analysis of methodology, assumptions and limiting conditions
  • Detailed exhibits that support computations

The minimum requirements:

  • Causes of appraisal
  • Term sheet of the bond (issuing memorandum)
  • Historic, detailed financial information
  • Financial forecasts, budgets
  • A summary of the company’s debt (and priority debt holders)
  • An overview of the company’s capital structure
  • An overview of the company and its operating divisions
  • A brief description of the products and services produced by the company
  • A copy of the current business plan (if available)
  • Copies of past appraisals