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Wednesday, 10 October 2018

Egypt could issue up to USD 20 bn in FCY-denominated bonds over the next four years

** #1 EXCLUSIVE- Egypt could issue up to USD 20 bn in FCY-denominated bonds over the next four years: The government is working on a plan to issue as much as USD 20 bn in foreign-currency denominated bonds between now and 2022, a senior government official told Enterprise on Tuesday. The source declined to go into details of the plan or to explain the administration’s current thinking on what is the longest timeline we’ve heard for FCY-denominated offerings. We do know the government is considering “Samurai” and “Panda” bonds sometime in the coming 12 months and is now on a nondeal roadshow ahead of a planned USD 5 bn eurobond offering.

Gov’t betting on (relative) FX stability? That level of borrowing isn’t out of step with recent practice, and it signals that the Madbouly cabinet, which is trying to rein in the public debt, has faith that the exchange rate isn’t going south on us as far out as four years from now. The move comes as the Madbouly Cabinet works on a strategy to rein in the public debt, striking a balance between expensive local-currency borrowing (with no FX risk) and less expensive foreign-currency borrowing (with plenty of FX risk) at the same time as the Emerging Markets Zombie Apocalypse has some investors pulling out of the market.

FinMin to select investment bank for USD 5 bn eurobond issuance next month: The Finance Ministry is planning to hold at the end of the month a tender to select the investment bank that will manage the sale of USD 5 bn worth of eurobonds it plans to issue early next year. The winning bid will be announced in November. The source noted that the timing of the issuance will be set once the advisors are on board. Finance Minister Mohamed Maait has previously said the issuance would take place sometime in 1Q2019.

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