Bridging Egypt’s Financing Gap Through Foreign Bonds

Updated 11/11/2023 9:00:00 AM
Bridging Egypt’s Financing Gap Through Foreign Bonds

The Egyptian government has been diversifying its sources of foreign currency finance through selling state-owned assets, entering into bilateral and multilateral financing agreements, and issuing various types of foreign currency government bonds.

Over the past few years, Egypt issued different types of bonds, including Eurobonds, green bonds, sovereign sukuk, Panda bonds, and Samurai bonds. The issuance of these securities is projected to support the country in its journey towards bridging the financial gap estimated at $17 billion.

In this Factsheet, we will explore the various foreign currency bonds issued by the Egyptian government, while highlighting their impact and importance for the ongoing economic status.

  • In September, the Minister of Finance announced that the country plans to raise $1.5 to $2 billion in financing through the issuance of foreign bonds by the end of 2023.
  • In late October, Egypt issued the second batch of the Samurai bonds. The issued securities' value reached ¥75 billion, equivalent to $500 million. The recently issued Samurai bonds have a maturity of five years and a regular dividend of 1.5%. The long maturity of these bonds aims to extend Egypt’s debt maturity. The Samurai bonds are provided with a credit guarantee from Japan's Sumitomo Mitsui Banking Corporation.
  • Egypt issued the first batch of Samurai bonds in March 2022 at a value of ¥60 billion (equivalent to $500 million at the time), with a rate of 0.85%. A third batch was greenlit in October 2023.
  • In mid-October 2023, the Egyptian government issued the first sustainable Panda bonds in the Middle East and North Africa (MENA). The yuan-denominated bonds were issued to collect ¥3.5 billion ($500 million), with a yield of 3.5% and a maturity of three years. The issued bonds target attracting Chinese investors to finance sustainable development projects. The Panda bond issuance is guaranteed by the Asian Infrastructure Investment Bank (AIIB) and the African Development Bank (AFDB).
  • In February, the Minister of Finance announced the issuance of the first sovereign Islamic sukuk at a total value of $1.5 billion. The US-denominated bonds have a yield of 11%. Upon its issuance, around 250 investors purchased the Egyptian sukuk, with the offer covering fourfold its face value. The proceeds from these sukuk are directed to finance public investment projects.
  • In late 2020, Egypt pioneered the MENA region by issuing the first sovereign green bonds. The $750 million bonds were listed on the London Stock Exchange (LSE) with a five-year tenor. The bonds were oversubscribed seven times, resulting in a coupon rate of 5.25%.
  • Around $364.7 million of the bonds’ proceeds were allocated for clean transportation projects, including the Cairo Monorail, while $403 million were directed to 14 water management projects.
  • On a regular basis, Egypt issues Eurobonds to attract foreign finance, whether the bonds are USD-denominated or euro-denominated. The outstanding stock of bonds as of March 2023 included $22.5 billion of Eurobonds issued in US dollars and $4.1 billion in euros.

By: Amina Hussein

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