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Monday, 19 February 2018

Gov’t planning USD 3-4 bn eurobond issuance in FY2018-19

The Ismail government is planning a USD 3-4 bn eurobond issuance in FY2018-19, the new fiscal year starting in July, said Vice Minister of Finance Ahmed Kouchouk. In an interview with Al Arabiya on Sunday, Kouchouk that they will focus more on Asian investors in their upcoming roadshows. Kouchouk had told us in an exclusive that last week’s USD 4 bn eurobond sale saw new appetite from Asian investors.

Speaking of the EUR 1-1.5 bn issuance in April, Kouchouk noted that the investment banks that will manage the issuance have not yet been selected. Advisers last time around were HSBC, Citigroup, JPMorgan Chase & Co, Morgan Stanley, and National Bank of Abu Dhabi led the issuance. Al Tamimi & Co. and Dechert were legal advisors to the government, while Linklater and Zaki Hashem & Partners were counsel to the bankers.

Government turning again to domestic borrowing after interest rate cut? Asked about the impact of last Thursday’s 100 bps interest rate cut, Kouchouk said that the move would allow the government to shift focus back on domestic borrowing. “We will be increasing our issuances of EGP-denominated bonds, as long-term borrowing costs in Egypt get cheaper,” he added. As we noted last week, Capital Economics had projected that monetary easing would help increase the private sector’s access to credit, after it had been crowded out by government borrowing from domestic banks. The firm said it was possible that the government’s reliance on eurobonds and international markets would help channel credit towards the private sector.

You can catch the full interview with Kouchouk here (watch, runtime: 8:32).

Meanwhile, investors and business leaders continue to welcome the 100 bps interest rate cut, calling it a “positive development,” particularly for industry, according to Al Shorouk. Look for improved appetite for capital expenditures, it says, while real estate is also expected to benefit as more people redirect liquidity from banks and towards the sector for its higher returns, says Al Ahly for Real Estate Chairman Hussein Sabbour (who has no dog in that fight, naturally).

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