For 2nd time in 2021, Egypt issues dollar-denominated bonds to raise up to $3B

CAIRO – 23 September 2021: Egypt began Thursday marketing multi-tranche US dollar-denominated bonds, as it seeks to raise up to $3 billion.

This is Egypt’s second dollar-denominated bonds issuance in 2021, taking advantage of lower borrowing costs before the US Federal Reserve decides when to reduce monetary stimulus.

The issuance includes six-year notes with an initial yield of 6.125% as well as 12- and 30-year notes targeting returns of 7.625% and 8.875%, respectively, according to a source familiar with the matter who spoke to Bloomberg and asked not to be named because he was not authorized to speak publicly.

Citibank, First Abu Dhabi Bank, HSBC, JPMorgan and Standard Chartered were appointed to arrange the bond sale.

Two sources familiar with the matter told Reuters that the government has appointed banks including “JPMorgan Chase”, “Citigroup”, “HSBC” and “First Abu Dhabi Bank” to manage the deal, and it aims to raise $2.5 billion up to $3 billion.

Egypt turned to international markets to raise $3.8 billion from the sale of dollar-denominated bonds earlier in 2021. It also sold $750 million of green bonds in 2020.

The proceeds of the green bonds being used to finance expenditures related to environmentally friendly green projects, and to achieve Egypt's plan for sustainable development in the areas of clean transportation, renewable energy, pollution reduction and control, climate change adaptation, energy efficiency, and sustainable management of water and sanitation, in light of the "Egypt Vision 2030" which gives priority to green investment projects.

Mohamed Maait, the Egyptian Minister of Finance, said earlier: “We are pleased to join the group of sovereign green bond-issuing countries that play a leading role in green development, and we appreciate the great demand from investors for this successful issuance, which demonstrates their support and confidence in the government’s efforts to diversify the financing necessary to achieve the goals of sustainable development"

According to EFG Hermes, the country's external financing needs for the fiscal year ending in June range between $5 billion and $7 billion.