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Thursday, 20 September 2018

Egypt might hold USD 5 bn bond issue in 2019

**#1 Egypt could tap global debt market with USD 5 bn bond issue in 2019: Is Egypt’s economy resilient enough in the face of the EM apocalypse to go back to the debt market? Yes, said Finance Minister Mohamed Maait at a luncheon yesterday hosted by AmCham. Egypt’s economy is proving “resilient” in the face of EM turbulence and there are additional sources of funding to draw on if needed, he said, according to Reuters. “We are going to sell bonds in the coming months in the market. It could be USD 5 bn, plus or minus,” Maait added.

When: The government will return to the international debt market “at the appropriate time,” he said, possibly in January-March 2019. He added that the country could currently depend on planned budget support from international lenders and “if we can’t, we will take (treasury sales) with a higher cost.” His statement comes after Egypt cancelled a third treasury bond auction earlier this week as rattled EM investors demanded higher yields.

Maait didn’t mince words on the impact of the EM selloff: Maait acknowledged that Egypt faced “steep debt repayments” and that higher oil prices and that a slip of EGP could “disturb” Egypt’s goal of reducing its budget deficit to 8.4% in FY2018-19, from 9.8% last year. But he remained optimistic: “Until now our economy is able to deal with the consequences of this negative effect,” Maait said. “I believe that our economy is resilient, I believe that our economy is well diversified … We hope that in the coming few months we see a different environment.”

Cue the state privatization program: The government would evaluate how to proceed with the second phase of the state privatization program in January, said Maait, according to Reuters. He reassured attendees that the state is pushing ahead with five stake sales on the EGX this year, two in October (AMOC and Eastern Tobacco), two in November and one in December. “The five companies we decided to work on, we decided to see how it would go,” he said, adding that Egypt would then see whether it could work with strategic investors for further sales.

No more gas imports after October? Egypt may not have to import gas after October as a number of Egypt’s concessions come online, Maait said, according to Al Shorouk. While he wasn’t specific, this could imply that a gas tender in October could be the last one.

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