Egypt considers issuing up to $20B in foreign currency bonds

CAIRO – 10 October 2018: The Egyptian government is planning to issue up to $20 billion in a foreign-currency denominated bonds anytime from now until 2022, a senior government official told Enterprise on Tuesday, Oct. 9.

After the government canceled treasury bonds four times this year as a result of callings to raise the interest rates, it started to look for international bonds opportunities.

“The required return rates were not within logical limits and did not reflect the good economic and financial performance or the improvement of Egypt’s credit rating, but were affected by the risks associated with the emerging markets,” the ministry noted upon the second cancellation.

The government now takes into consideration issuing Samurai and Panda bonds during the upcoming 12 months.

Foreign bonds are referred to as Samuari bonds in the Japanese market and as Panda bonds in China.

Meanwhile, Egypt’s Finance Minister Mohamed Ma’it participated in a non-deal roadshow on October 8, in South Korea as a part of the minister’s plan to visit a number of Asian countries to present Egypt’s compelling investment story and attract new international investors to the Egyptian market.

Ma’it will also visit Singapore, Hong Kong, China and Japan, as Egypt planned a $5 billion Eurobond issuance.

The Finance Ministry auctioned on Tuesday five and 10 year treasury bonds at a total value of LE 1.25 billion, with an average of 18.41 percent on shorter-term offerings and 18.37 percent for the longer term.

For the current fiscal year, the budget deficit is estimated to record LE 438.59 billion, or 8.4 percent, planned by the ministry to be financed through treasury bills and bonds and through international and Arab loans.

Foreign investments in the Egyptian government debt instruments recorded $23.1 billion by the end of March 2018, up from about $20 billion in December 2017.

Egypt needs to fund 2018/2019 budget by LE 714.64 billion; LE 511.21 billion will be provided by domestic debt instrument and the rest will come from foreign financing through the issuance of bonds and the IMF loan.

In November 2016, the Executive Board of the IMF approved a $12 billion loan as a financial assistance to Egypt to support the Egyptian economic reform program.

Upon the board's approval in November, Egypt floated its currency, losing around 50 percent of its value, as part of the economic reform program which imposed taxes, including the value-added tax (VAT), and cut energy subsidies, all with the aim of trimming the budget deficit.