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Wednesday, 4 September 2019

What’s going on with Egypt’s repayment of the Suez Canal certificates?

What’s going on with the Suez Canal certificate payments? Reports emerged in the local press yesterday claiming that the Finance Ministry intends to issue EGP 64 bn-worth of debt instruments to pay the holders of five-year Suez Canal certificates of deposit (CD), which mature this Thursday. Unnamed government sources speaking to the press said that banks will receive the proceeds from the bond sale, and pay CD holders the principal on their investment. Finance Minister Mohamed Maait, however, denied these reports to Enterprise, telling us that his ministry has no intention to issue more debt instruments to cover the necessary payments for the maturing CDs.

CBE is already disbursing payments to issuing banks: The government previously accounted for the payments and has already provided the payments to the Central Bank of Egypt, which is in turn disbursing them to the banks that had issued the CDs, Maait told us. Sources in the banking sector said that the Central Bank of Egypt has already begun paying out proceeds to Banque du Caire, Banque Misr, the National Bank of Egypt, and Suez Canal Bank customers.

Background: The Suez Canal Authority raised more than EGP 60 bn in 2014 by offering five-year certificates to bank customers at a 12% interest rate. The proceeds were used to fund the construction of the new Suez Canal and several new tunnels. Analysts said last month that up to 80% of the 1.1 mn Suez CD holders will likely reinvest the money into new certificates.

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