Egypt sells $4bn multi-tranche bond

26 January 2017

The North African nation has raised twice the targeted amount from debt sale

Egypt has launched a triple-tranche bond to raise $4bn, which is twice the size of the funding target given when Cairo started investor meetings in mid-January.

The new senior unsecured five-, 10- and 30-year bonds are issued under the Egypt’s Global Medium-Term Note programme. Egypt is paying investors 6.125 per cent for $1.75bn note maturing on 31 January 2022. The $1bn 10-year tranche offers 7.5 per cent, while the 30-year $1.25bn issue offers 8.5 per cent interest.

US-based Fitch Ratings has rated the new issues at ‘B’, consistent with Egypt’s existing senior unsecured ratings and its long-term foreign-currency issuer default rating (IDR) of ‘B’ with a stable outlook. Fitch, had affirmed the IDR on 15 December 2016, it said in a 26 January statement.

The bonds yield lower than the initially marketing levels of 6.375-6.625 per cent, 7.625-7.875 per cent, and 8.625-8.875 per cent for five- 10- and 30-year tranches, respectively.

Reports have suggested that the combined order books for the bonds were over $13.5bn. The offering was run by BNP Paribas, Citigroup, JPMorgan and Natixis and the new issues will be listed on the Luxembourg Stock Exchange. The investor meetings were scheduled to begin in November, however, Egypt cancelled the roadshow due to market volatility. 

Egypt has struggled with political volatility since the ouster of former president Hosni Mubarak, which has depleted the dragged down the levels of foreign direct investments and affected the tourism sector, its main sources of hard foreign currency.

The country has been looking to raise funds through a variety of sources to kick-start its economy and fund the development projects, which were delayed due to acute dollar shortage.

The central bank in November broke away the dollar peg and floated Egyptian pound which it hopes will alleviate the currency crisis it has faced over the past few years. The country has also agreed a $12bn loan programme from the International Monetary Fund (IMF) to support plans for sweeping economic reforms.

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