Egypt Set to Raise Samurai Bonds Worth $500 Million This Week

The government is issuing the yen-denominated five-year debt in a private placement that will probably be completed Thursday, the head of the finance ministry’s debt management unit, Mohamed Hegazy, said in an interview. It will target a yield of between 0.80% to 0.85%, he said.

Sumitomo Mitsui Banking Corp. is managing the transaction. Egypt has never sold yen bonds, which are known as Samurai deals when they’re issued by non-Japanese entities.

“We found good investor appetite,” Hegazy said. The bonds will have a “competitive yield” considering the “tightening market conditions that have limited access for several emerging economies.”

Egypt hiked interest rates in an unscheduled meeting and let its currency weaken on Monday as rising food and oil costs add to inflationary pressures. Commodity prices have soared since Russia invaded Ukraine last month. While many countries have been hit, Egypt’s particularly vulnerable because it has to import most of its fuel and buys around 85% of its wheat from Russia and Ukraine. It also relies heavily on tourists from Russia.

Bloomberg reported last week that Egypt is in talks with the International Monetary Fund about a support package that might include a loan.

The finance ministry is also preparing its first issuance of Islamic bonds known as sukuk. The government may raise $2 billion in the second quarter of the year, said Hegazy.

It selected Citigroup Inc., HSBC Holdings Plc, Abu Dhabi Islamic Bank PJSC, Credit Agricole SA, Emirates NBD Bank PJSC and First Abu Dhabi Bank PJSC to manage the deal, Hegazy said, confirming a Bloomberg report from last month.