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Wednesday, 9 January 2019

Finance Ministry moves ahead with tender for Egypt’s eurobond managers, legal advisors

EXCLUSIVE- FinMin moves ahead with tender for eurobond managers, legal advisors: The Finance Ministry has received the green light from Cabinet to move ahead with issuing a tender for investment banks and law firms to act as joint lead managers and legal advisors for Egypt’s upcoming eurobond issuance, a senior government official tells Enterprise. The ministry expects to settle on the advisors for the issuance within the next few weeks, once the holiday season passes and officials get a chance to meet with “international partners” (presumably the IMF). The timing of the issuance remains undetermined, and will likely only be decided on once the full team of advisors is on board. A government official had previously told us that the ministry is looking to select at least one Asian bank to join the final lineup of bookrunners, since the government’s planned issuances will largely be concentrated in Asian markets. HSBC, Citigroup, JPMorgan Chase & Co, Morgan Stanley, and National Bank of Abu Dhabi had led past eurobond issuances.

Background: Egypt has been preparing to issue USD 4-7 bn worth of yen-, yuan-, USD-, and EUR-denominated bonds in 1Q2019, we reported last month. Egypt has also been waiting on global markets to stabilize before moving ahead with its issuances, government sources had previously told us. Finance Minister Mohamed Maait had also said earlier this month that the Madbouly government will release details on its 1Q2019 international bond issuances sometime next month.

Will the EM New Year rebound bode well for the issuance? The decision on the timing of the eurobond issuance will undoubtedly factor the substantial rebound in emerging markets witnessed since the new year. The MSCI currency index rose to its highest level since July 2018 on Sunday, while indices across the region saw gains. Morgan Stanley’s EM sovereign credit outlook for 2019 expected international bond issuance to rise 15% to USD 158 bn from the previous year, with Egypt expected to issue international treasury bonds “sooner than later.”

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