Minister of Finance determines uses of Eurobonds proceeds

CAIRO – 9 February 2021: The recent issuance of Egyptian international bonds worth $ 3.75 billion will contribute to providing additional sources of financing for the budget, and part of the financing needs for the current fiscal year 2020-2021, Minister of Finance Mohamed Maait stated.

Maait added Tuesday that these bonds will also provide the required financing to deal with the crisis and repercussions of the Coronavirus pandemic, financing financial stimulus initiatives and the needs of the health sector, as well as financing social protection and human development programs.

He stressed that these bonds will also extend the life of the Egyptian government debt portfolio and reduce the average cost of government debt, which will contribute to improving the indicators of government debt sustainability and debt service, in a way that increases investor confidence in the continuation and improvement of the sustainability of public finances and government debt for Egypt.

He pointed out that the success of the international issuance reflects investor confidence in the ability, potential and performance of the Egyptian economy, due to the improvement of all economic and financial indicators of Egypt, which enabled the Egyptian economy to withstand and deal with external shocks in a strong and balanced manner.

Egypt, represented by the Ministry of Finance, succeeded in the issuance of international bonds worth $ 3.75 billion in 3 tranches (5, 10 and 40 years), with issued values ​​of $ 750 million, $ 1.5 billion, and $ 1.5 billion, respectively.

The issuance was oversubscribed by 4.4 times, which contributed to lowering the interest rates (the coupon) to less than what was achieved during previous issuances that took place during the past years, for the three tranches of the issue with terms (5, 10 and 40 years). .

For his part, Deputy Minister of Finance for Financial Policies, Ahmed Kojak, said that the strong demand for the Egyptian international bond offering enabled Egypt to successfully issue international bonds of the required size and achieve the lowest possible interest rate on the offered international bonds.

Kojak explained that the offering witnessed the application of more than 400 investors to buy and subscribe to Egyptian international bonds, of whom 40 new investors are subscribing for the first time in Egyptian international bonds, which represents a continuation of the Ministry of Finance's approach, which aims to expand and diversify the investor base in Egyptian international bonds.

He added that the purchase orders came in a wide variety of ways to reflect the desire of a large number of investors from all geographical regions in the world, including the United States, European countries, Asian countries, Middle East and Africa countries.

The Deputy Finance Minister mentioned that this provided a strong and diversified volume of applications that helped the Ministry of Finance in the end to reduce the interest rates on the bonds offered by about 37.5 basis points for the three tranches, compared to the indicative prices announced at the beginning of the offering process, as well as the issuance without adding a new issue premium to the interest rates issued for the three tranches.

He emphasized that the interest rates achieved on bonds with maturities of 5 and 10 years were lower than the rates prevailing in the secondary markets before the offering, which is a very good indicator that reflects the investors ’desire to participate strongly in the offering and investment in Egyptian international bonds.