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Monday, 14 January 2019

FinMin heads east ahead of Egypt’s bond issuances

Maait heads to Asia to pave the way for bond issuances: Finance Minister Mohamed Maait will begin a trip today that will see him visit Japan, South Korea, Hong Kong and China to discuss bond issuances. The government is now more flexible and is seeking to diversify “the currency, the type of asset and the target market,” he told reporters at the CI Capital MENA Investors Conference, which we attended yesterday. Our sources at the Finance Ministry also tell us that Maait’s trip will also extend to Europe and select cities in the US. Investment banks and financial institutions are arranging sit-downs with potential investors to help gauge appetite for Egyptian debt, our sources say.

Egypt to issue Samurai bonds next week? The news comes Reuters reports that Egypt will issue USD 2 bn of yen-denominated bonds “in the coming week,” citing two unnamed sources. Proceeds from the issuance will be earmarked for paying down debt at state petroleum supremo EGPC, one of the sources said. Maait had told Bloomberg in October that the ministry plans to issue both yen and yuan-denominated bonds for the first time in 1Q2019. The government is also looking to sell eurobonds in 1H2019 and had been focused on promoting the issuance in Asia. The move comes part of the government’s efforts to diversify the country’s sources of debt finance.

Foreign bond issuances could total USD 7 bn in 1Q2019: Egypt could issue up to USD 7 bn worth of FX-denominated bonds following the Madbouly Cabinet’s approval, Maait told reporters at the CI Capital conference yesterday. “The value will not be less than USD 3 bn and will not exceed USD 7 bn,” he said. Maait had said in September that the ministry is aiming to issue around USD 5 bn worth of bonds. “The ministry has got approval from the cabinet to offer international bonds and the procedures have started,” the minister noted. However the government is yet to finalize the details regarding the value and denomination of the bonds. Cabinet had signed off last week on the Finance Ministry’s debt control strategy, which caps Egypt’s eurobond issuances at USD 22 bn until the end of FY2021-22.

Maait also yesterday that said he hopes to see interest rates come down, especially with debt levels being as high as they are. Meanwhile, talks with the IMF on the delayed USD 2 bn disbursement are progressing and the ministry will come out with a statement soon, he told reporters at the CI Capital conference. The IMF had said that it would wait and see how Egypt implements the new fuel pricing strategy, announced last week by the government, before committing the disbursement.

The finance minister also pledged that tax rates won’t be changing soon, sticking to the Sisi administration’s policy of tax-rate stability.

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