The Ministry of Finance revealed that the government has paid back $1.36bn worth of international bonds that were due at the end of December 2017.
According to the ministry, Egypt’s balance of issued bonds on international markets fell to $12.64bn at the end of December 2017, compared to about $14bn at the beginning of the same month.
The maturities of remaining outstanding bonds range from two to 29 years, starting from 29 April 2020 until 31 January 2047. The bonds were issued from 29 April 2010 to 31 May 2017.
The bonds’ coupon interest rate ranges between 5.45% and 8.5%, with an average of 6.778%.
Despite the current decline in Egypt’s international bonds’ value, it is likely to increase again in mid-February, as the government plans to issue new international bonds worth $4bn, according to Finance Minister Amr El-Garhy.
The new bonds will be offered on the London and Luxembourg stock exchanges, while HSBC Holdings plc, Citigroup Inc, JPMorgan Chase & Co, Morgan Stanley, and the National Bank of Abu Dhabi will manage the issuance process. Al Tamimi & Company and Dechert LLP were chosen as legal advisers to the government and Linklaters LLP and Zaki Hashem & Partners are advising the banking consortium.
The Ministry of Finance offered its last package of bonds on international markets, worth $3bn, on 31 May 2017, including bonds for $750m which were launched for a term of five years, due on 31 January 2022, with a return of 5.45%. Other bonds were launched for $1bn for a term of 10 years, due on 31 January 2027 with a return of 6.65%, in addition to bonds worth $1.25bn for a term of 30 years, due on 31 January 2047 with a return of 7.95%.
In January 2017, the ministry launched three packages of bonds through which it managed to attract $4bn. On 10 November 2016, the ministry also launched bonds worth $4bn in a special listing on the London Stock Exchange. Moreover, there were four other bonds worth $1bn issued on international markets in April 2010 with a 5.75% return, due on 29 April 2020, in addition to another bond worth $500m on 29 April 2010 with a 6.875% return, due on 29 April 2040.
The Egyptian government stopped issuing international bonds for several years after 25 January 2011, but it has issued large volumes of bonds over the past two years.
According to an economic expert, Egypt’s success in issuing bonds on the international market reflects the world’s confidence in the Egyptian economy and its ability to provide liquidity in foreign currency to bridge the financial gap it faces.