Egypt’s foreign debt stood at USD 88.2 bn in 3Q2017-18, up from USD 73.9 bn during the same period last year and up from USD 82.9 bn in December 2017, central bank data showed on Monday (pdf). Despite the 19.3% y-o-y increase, the CBE says the debt-to-GDP ratio is still within safe limits at 36.8%. Debt from international bond issuances rose to USD 12.2 bn in 3Q2017-18, up from USD 8.9 bn in the same period last year, thanks to a USD 4 bn eurobond issuance in February. Total public debt for the period grew EGP 3.5 tn, or 86% of GDP.

CBE data also showed that foreign holdings of Egyptian debt fell in May for the second straight month this year, dropping 17.2% m-o-m to EGP 310.6 bn. We expect this figure to continue to drop for the following month as the CBE continues to record the impact of the emerging markets selloff on Egyptian debt instruments. According to Goldman Sachs the wider EM selloff reached its peak in June. Finance Minister Mohamed Maait said last week that foreign portfolio investors had sold off USD 3-4 bn of Egyptian debt.

On the flipside, debt service costs fell to USD 2.4 bn in 3Q2017-18, down from USD 6.8 bn in December 2017.

This comes as Egypt is expecting to receive around USD 450 mn in new loans from Europe to support the economic reform program, Vice Minister of Finance Ahmed Kouchouk said yesterday, Al Mal reports. We’ll be receiving USD 250 mn from Germany and another USD 200 mn from France, he added, without elaborating. As for the fate of any upcoming eurobond issuance, Maait had told us that the decision will be taken in the fall whether to go ahead with an issuance or seek alternative financing. Turbulence in emerging markets and global political tensions had left any potential issuance to the fate of market conditions.

Egypt will reportedly repay USD 6.3 bn of its foreign debt obligations in 2H2018, includes some USD 850 mn owed to international oil companies, according to previous reports from the newspaper. UAE government reportedly agreed to roll over two deposits at the CBE worth USD 2 bn each, with the CBE working on similar moves from other GCC depositors.

The story is gaining traction in the foreign press, with an Associated Press story now getting traction trying to paint the uptick in debt as a dent in the Sisi administration’s economic reform program.