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Monday, 15 April 2019

Egyptian securities to be Euroclearable in six months’ time

Egypt eyes “euroclearable” sovereign debt issuance in September: The government is looking to announce a sovereign debt issuance that can be cleared through Belgium-based clearinghouse Euroclear by late September, Finance Minister Mohamed Maait told Reuters. The minister had said over the weekend that the Finance Ministry has signed an MoU with Euroclear to make EGP-denominated debt clearable through the outfit, which a source close to the matter tells Reuters will officially be announced today. Having domestic debt available via 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 agreement with Euroclear could be expanded in the future to cover domestic debt instruments, said Stephan Pouyat, Euroclear’s global head of capital markets and fund services. “We are not just going to do the government bonds. We will start by that, because that’s what international investors need,” Pouyat said. “The intention is for the market to eventually become Euroclearable, creating a cross-border link to enable international investment in Egyptian domestic debt instruments.”

Background: Maait opened talks with Euroclear last September. He also said earlier this week that Egypt will not issue samurai, panda or green bonds or sukuk before the next fiscal year to give the government more time to prepare and comply with Euroclear regulatory requirements. The issuances were originally planned to take place in the current fiscal year. The ministry had said last week that Egypt would not tap the international debt market again this fiscal year, after successfully selling EUR 2 bn-worth of eurobonds that was more than 4x oversubscribed.

IPO WATCH- Egypt could sell stakes in up to six state-owned companies by end-June 2020, Maait also told Reuters. The minister was otherwise tight-lipped on the state privatization program, saying only that the government may announce something before June. “It hurts us when we announce early,” he said. This comes as Heliopolis Company for Housing and Development plans to begin today auctioning off part of its land portfolio, which could be a prelude to its stake sale on the EGX, managing director for financial affairs Sahar El Damaty tells Al Mal. El Damaty said last month the company was planning to offer a 32.25% stake on the EGX by mid-2019.

Background: Sources close to the matter said last week that the government is gearing up to sell a 20% stake of Abu Kir Fertilizers on the EGX, but had not specified a timeline. Public Enterprises Minister Hisham Tawfik previously said all offerings in the first wave of companies piloting the program — which will only see share sales and not IPOs — would wrap up before the Eid El Fitr break. Eastern Tobacco, whose 4.5% secondary offering went to market last month, Abu Kir, Alexandria Containers & Cargo Handling, and Heliopolis Housing, together comprise the first wave.

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