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Sunday, 20 December 2020

Fresh eurobonds aren’t in the cards yet -Maait

The Finance Ministry doesn’t have any immediate plans to take a USD 7 bn eurobond sale to market in 1H2021, Finance Minister Mohamed Maait told Kelma Akhira’s Lamees El Hadidi yesterday (watch, runtime: 3:17). Maait denied an earlier report from Asharq Bloomberg suggesting that Egypt is actively moving towards a sale, explaining to Lamees that the state budget gives the Finance Ministry the license to borrow up to USD 7 bn through debt instruments in the international market. Whether or not the ministry decides to issue that amount of international debt — or any debt at all, for that matter — depends entirely on the circumstances as the fiscal year progresses, Maait explained.

The ministry is in talks with potential advisors so that it is in “standby mode” when an issuance is needed and the market conditions are right, head of the ministry’s debt management unit Mohamed Hegazy confirmed to Enterprise. Hegazy denied a local press report claiming that a sale of USD 3-4 bn-worth of EUR- or USD-denominated eurobonds could come in 1Q2021, telling us that there is no schedule set in stone since Egypt currently has its financing needs secured. The report had also suggested that the issuance would be structured in a similar way to a USD 5 bn sale Egypt closed in May, which had several tranches, one of which carried a tenor of 30 years — all of which Hegazy denied. The government has been consistently tapping the debt market over the past four fiscal years, raising upward of USD 20 bn to diversify its debt portfolio and keep building its stock of foreign reserves.

ALSO NOT IN THE CARDS RIGHT NOW: Egypt’s planned sale of Samurai and Panda bonds, which the government is pushing to FY2021-2022 because of complications caused by covid-19, Finance Minister Mohamed Maait tells the local press. The government has been mulling the yen- and yuan-denominated bonds since 2018, and said last year that it would issue the bonds in 1Q2020 but postponed the issuance. Marketing foreign bonds in Asian markets requires more complicated clearance procedures such as new ratings assessments by Asian ratings agencies.

The bid to diversify its debt portfolio would also see the government sell floating-rate sovereign bonds, and take to market our sovereign sukuk issuance after a draft law gets final approval next year. The government earlier this year sold USD 750 mn in greenbonds for the first time in Egypt’s history. Besides diversifying sources of funding and introducing new debt instruments, the government’s debt policy also aims to extend the average tenor of debt to reduce the annual debt servicing bill.

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