Egypt returns to int’l bond markets with $4B Eurobond issue

CAIRO – 14 February 2018: Egypt succeeded in issuing Eurobonds worth $4 billion on three tranches; three, five and 30 years, according to the Ministry of Finance's statement.

The purchase requests exceeded $12 billion in the first few hours after the issuance despite the volatility of the international stock markets, the statement said.

The statement noted that this issuance guarantees the increased interest for foreign investors in the Egyptian Economy in light of the economic reforms, praised by the international specialized institutions such as the International Monetary Fund and the World Bank; these reforms helped in improving Egypt’s outlook.

Minister of Finance Amr al-Garhy stressed the presence of great interest in participating in the $4 billion Eurobond issue, which was covered three times after receiving a $12 billion request from the investors.

The minister of finance pointed out that the Eurobond issue, as well as Egypt's agreement with the International Monetary Fund and other procedures taken by the government, will contribute in covering the funding gap for the current fiscal year 2017/2018.

Garhy added that the outturn will be directed to the Central Bank to support the dollar reserves, while the cash equivalent in Egyptian pounds will be directed to finance the activities of the general budget.

For his part, Deputy Minister of Finance for Financial Policies Ahmed Kojak said that the Egyptian issue in the international markets has attracted more than 550 international investors from all target markets: Europe, America, Asia and the Middle East. He also explained that they had received orders to buy bonds in large numbers, exceeding $ 500 million per an investor.

Kojak confirmed that Egypt's return to the international bond market is the first since May 2017, referring that the Egyptian government has issued Eurobonds worth $4 billion on three different maturities, a five-year term of $ 1.25 billion, with an annual return of 5.58 percent; a 10-year term of $1.25 billion, with an annual yield of 6.59 percent and a 30-year maturity of $ 1.5 billion and an annual return of 7.9 percent.

In December, Egypt selected five banks to arrange the Eurobond issuance. The banks are J.P. Morgan, Morgan Stanley, Citibank, HSBC and First Abu Dhabi Bank.

Egypt issued $7 billion in Eurobonds' sales in January and May 2017 on the global bond market, both of which were oversubscribed, according to the Ministry of Finance.

Egypt had embarked on a bold economic reform program that included the introduction of taxes, such as the Value added tax (VAT), and cutting energy subsidies, with the aim of trimming the budget deficit.

The country has floated its currency in November 2016 before it clinched a $12 billion loan from the International Monetary Fund (IMF).

Egypt is to receive a fourth disbursal of that loan, worth $2 billion, in June or July, the Finance Ministry said in previous statements, bringing the total it has received to $8 billion. The IMF agreed in December 2017 to the third disbursal, also worth $2 billion.