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Wednesday, 17 August 2022

FinMin is aiming for a Panda bonds issuance soon, Maait says

EXCLUSIVE- Progress on panda bonds, Maait tells Enterprise: Egypt is in talks with Chinese officials to issue CNY-denominated bonds in the world’s second-largest bond market, Finance Minister Mohamed Maait told Enterprise. The minister declined to be specific about the size of the potential offering.

FinMin is still searching for bookrunners and has not yet signed final agreements with investment banks, Maait said, adding that the ministry has finalized most procedures and expects to wrap negotiations on the size of the issuance “soon.”

The issuance is part of the ministry’s plan to diversify its debt portfolio and would come on the heels of our maiden samurai bond debut in late March. The government had been mulling selling the JPY- and CNY-denominated bonds back in 2019, but the sales were delayed because of complications caused by the pandemic. Marketing foreign bonds in Asian markets is a different ball game and also requires new ratings assessments by Asian agencies.

Speaking of bonds — Egypt has no plans to issue any other fresh international debt, Maait tells us. “We haven’t presented any international bond offering plans to the cabinet since the start of FY 2021-2022 while we wait for an improvement of conditions in the global financial markets,” he said. Bloomberg Asharq earlier this week reported that the ministry was planning to issue USD 5-6 bn worth of bonds this fiscal year, citing a government source. The impact of the Russia-Ukraine war and heightened geopolitical tensions make it impossible to estimate when we might again tap the international bond market, Maait said.

No news from the IMF, Maait says: The government and the IMF have not yet settled on the size of the assistance program the multilateral lender will offer to Egypt — and no date has been set to conclude the talks, Maait tells us. Some parts of the program have already been agreed upon in the negotiations, he added, and talks are ongoing.

REMEMBER- Maait in recent weeks refuted talk of Egypt requesting anything close to the USD 15 bn figure that Goldman Sachs has said Egypt may need to secure from the IMF to meet its financing needs over the next three years. Talks have been ongoing with the IMF since earlier this year over the package, which will likely offer us a smaller sum, in return for what the IMF calls “decisive” steps on fiscal and structural reforms to reduce our exposure to external shocks.

Maait again emphasized the Madbouly government’s commitment to improving both the business and investment climate, pointing to recent moves to leave electricity prices for industry unchanged as well as a three-year real estate tax holiday announced last month for SMEs as well as manufacturers in a number of strategic industries.

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