Egypt Is Returning to Dollar Bond Market With Three-Tranche Deal

CAIRO (Capital Markets in Africa) – Egypt is returning to the dollar debt market to benefit from renewed investor confidence in the economy after sweeping reforms and support from the International Monetary Fund.

The government is offering benchmark-sized tranches maturing in five, 10 and 30 years, according to a person familiar with the matter. The initial pricing target is more than one percentage point over last year’s three-part deal that raised $4 billion across similar maturities. Egypt plans to sell as much as $5 billion worth of bonds this week, the Cairo-based Borsa daily reported, citing unidentified government officials.

Egypt is taking advantage of improving sentiment after the IMF earlier this month approved the release oaf the fifth tranche of the country’s $12 billion loan. Economic growth in the Arab world’s most populous nation largely stalled following the 2011 uprising that ousted President Hosni Mubarak, but it’s steadily rebounded, with the government targeting a gain of 5.6 percent for the fiscal year ending in June.

“Egypt is an improving credit story,” said Mohammed Elmi, an emerging-market portfolio manager at Federated Investors U.K. in London, who is planning to buy the bonds. “The fiscal adjustment has been on track under the IMF program, the current-account deficit has narrowed sharply, and growth dynamics are strong.”

Egypt, which sold more than $9 billion last year in euro and dollar-denominated bonds, is joining a rush from governments in developing nations including Saudi Arabia and Turkey amid a pause in U.S. interest-rate hikes and a sudden influx of cash into emerging-market bond funds. The sovereign is potentially the first from Africa to tap the Eurobond market in 2019 after a record $30 billion was raised last year, according to data compiled by Bloomberg.

Source: Bloomberg Business News