Egypt sells $3.75B in dollar-denominated Eurobonds

CAIRO – 9 February 2021: Egypt sold dollar-denominated Eurobonds on Monday in three tranches worth $ 3.75 billion to finance part of the budget deficit, according to Reuters.

Documents from one of the banks arranging the deal showed that Egypt, after receiving requests for about $ 15 billion, sold five-year bonds worth $ 750 million with a yield of 3.875 percent and 10-year bonds worth $ 1.5 billion with a yield of 5.875 percent and 40-year bonds worth $ 1.5 billion, with a return of 7.5 percent.

This is considered to be the first eurobond sale in 2020/2021, and the second time Egypt has sold 40-year bonds, which were last featured in the $2 bn eurobond sale in 2019.

Egypt has resorted to the international debt markets as it seeks to overcome the coronavirus crisis that has caused the collapse of tourism, which is a major source of hard currency.

The pandemic has also led to a sharp drop in foreign direct investment and a decline in domestic economic activity.

The initial benchmark rate was 4.25 percent to 4.375 percent for the five-year bond tranche, about 6.25 percent for the 10-year bond, and about 7.875 percent for the 40-year bond.

Citi, First Abu Dhabi Bank, Goldman Sachs International, HSBC, JP Morgan and Standard Chartered are arranging the deal.

Egypt received $ 2.77 billion in emergency financing from the International Monetary Fund in May and a conditional loan of $ 5.2 billion from the fund in June.

In May, it sold $ 5 billion in three tranches of four-year, 10-year and 30-year bonds. In September, it sold $ 750 million in five-year green bonds, in the region's first sovereign issue.

In January, the IMF raised its forecast for the growth of Egypt's economy in the current fiscal year, which ends at the end of June, to 2.8 percent, which is in line with the minimum range of government estimates, indicating a contraction less than expected during the coronavirus pandemic.