Egypt returns to int'l bonds by longest-term in MENA

CAIRO - 14 November 2019: Egypt returns back to the international bond market through auctioning $2 billion in bonds in three tranches, according to the Ministry of Finance.

The ministry said the offering included $500 million of 4-year bonds with a 4.55 percent yield, $1 billion of 12-year bonds with a 7.05 percent yield, and $500 million of 40-year bonds with a 8.15 percent yield.

"The 40-year bond is considered to be the longest international bond in the Middle East and North Africa, which is a new success for the Finance Ministry policies that aim to extend the life of the public debt portfolio and reduce the cost of debt service," Finance Minister Mohamed Ma'it said.

"Subscription orders exceeded $14.5 billion within few hours of the issuance announcement, which oversubscribed the value of the offer by seven times," the ministry stated.

The ministry noted that the amount of the subscription helped in lowering the yields by 45 basis points compared with the initial price guidance.

On Nov. 13, a document from one of the banks leading the deal showed that Egypt started marketing a triple-tranche issuance of dollar denominated bonds, according to Reuters.The country is marketing a tranche due in 2023 with an initial price guidance of 4.9 percent-5 percent, and tranches due in 2032 and 2059 at around 7.5 percent and 8.6 percent, respectively.

Each tranche will be of benchmark size, which generally means upwards of $500 million. The bonds will be priced later on Nov. 13, according to the document.

On Nov. 7, the Central Bank of Egypt (CBE) announced that Egypt will offer euro-denominated bonds on Nov. 11, maturing on Nov. 12,2020.

In August, the Central Bank of Egypt (CBE) announced selling the euro-denominated treasury bills (T-bills) with a 364-day term worth €610 million, clarifying that the average yield on T-bills recorded 1.49 percent.

According to the data, CBE received about 37 offers for the tender on Monday, for a total value of €780.1 million.

The Ministry of Finance announced earlier that it depends on diversifying sources of financing between debt instruments and local and foreign markets.

It also noted as local interest rates begin to fall, long-term financing instruments can be expanded from the domestic market, rather than short-term borrowing; this is in addition to expanding the issuance of medium and long-term bonds, instead of bills, to increase the life of debt and reduce the risk of refinancing existing indebtedness.

Egypt succeeded in reducing the government debt to GDP ratio to 90.5 percent by the end of June, compared to 98 in the same month last year.

The Egyptian government aims to reduce the government debt to GDP ratio to 82.5 percent by the end of June 2020 and to 77.5 percent by the end of June 2022.

For the current fiscal year, the budget deficit is estimated to record LE 445.1 billion, or 7.2 percent, planned by the ministry to be financed through treasury bills and bonds and through international and Arab loans.