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Egypt sells $3 bln in Eurobonds on back of rising investor confidence

Published: Updated:

Egypt raised $3 billion in a Eurobond sale on Wednesday, about twice as much as targeted and at lower cost than when the same bonds were first sold in January, suggesting foreign appetite for the country’s debt is growing as it makes economic reforms.

Egypt returned to international debt markets to cover its financing needs following its successful sale earlier this year of $4 billion in five-, 10- and 30-year bonds.

On Wednesday, it sold another $750 million of the five-year paper at a yield of 5.45 percent, $1 billion of the 10-year bonds at 6.65 percent and $1.25 billion of the 30-year bonds at a yield of 7.95 percent.

Order books closed at $11 billion, a document issued by one of the banks leading the deal showed.

That total shows growing confidence in the country among foreign investors, whom Egypt has sought to lure back following a 2011 uprising that drove them away.

“This is a great success and shows confidence in the economy, because even with the yields lower they were able to cover more than they requested. This means that there is great appetite and a lot of people wanted to buy the bonds,” said one Cairo-based banker.

“This shows that there is very good sentiment on Egypt and expectations that yields could fall further in the future.”

IMF reform program

Egypt signed a three-year $12 billion International Monetary Fund program in November attached to reforms such as a value-added tax and subsidy cuts to curb the budget deficit, moves the IMF said would boost Egypt’s fiscal position. Cairo is trying to cut the deficit to 9.1 percent next year from an
expected 10.9 percent this year.

“It’s positive overall,” said Reham El-Dessouki, an economist at Arqam Capital. “Investors see Egypt’s economic reforms having a positive impact on future economic growth and they perceive Egypt to be less risky then before.”

The country of over 92 million has sought funds from a variety of sources, from development loans to foreign grants and aid, to plug its financing needs as it struggles with an acute dollar shortage that has hampered its ability to import.