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Sunday, 14 April 2019

Egypt pushes non-eurobond issuances into FY2019-20

Egypt pushes non-eurobond issuances into FY2019-20: Egypt will not issue yen- and yuan- denominated bonds (also known as Samurai and Panda bonds) — or green bonds or sukuk, for that matter — before the next fiscal year, which begins on 1 July, Finance Minister Mohamed Maait told Bloomberg in an interview in Washington, DC. The issuances were originally planned to take place in the current fiscal year but have been postponed to give the government more time to prepare and to comply with Euroclear regulatory requirements, Maait said. The government is also working to meet requirements for Egyptian debt to join the JPMorgan Emerging Market Bond Index. The Finance Ministry had said last week that Egypt would not tap the international debt market again this fiscal year, after successfully issuing EUR 2 bn-worth of eurobonds on the London Stock Exchange.

FinMin takes Euroclear plans forward: Maait also revealed that the ministry has signed an MoU with Euroclear to have EGP-denominated debt available on the Belgium-based clearinghouse, according to AMAY. We noted earlier this year that the ministry is expecting to finalize the agreement in June ahead of the coming fiscal year. Having domestic debt available on Euroclear will facilitate settlement for overseas investors, who can currently only access the debt market through a few local banks licensed to operate as primary dealers. “The move comes at a time of increasing foreign interest in Egyptian treasuries,” Maait said, adding that it will reduce Egypt’s debt servicing bill. Maait opened talks with Euroclear last September. He also said in February that Egypt is looking to be included in the JPMorgan Emerging Market Bond Index as part of a strategy to cut borrowing costs and boost inflows in the debt market.

Egypt and the IMF are cooking up a post-EFF partnership: Maait said the government is currently in talks with the IMF for a non-financial partnership to reassure investors once the extended fund facility expires this year. President Abdel Fattah El Sisi gave his nod to proceed with talks when he met with IMF Managing Director Christine Lagarde last week.

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