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Egypt plans $2.5-3 bln Eurobond by mid-Jan, second issue in H2 2017

Egypt plans $2.5-3 bln Eurobond by mid-Jan, second issue in H2 2017

Cairo: Egypt plans to issue its $2.5-3 billion Eurobond by mid-January and will seek to issue another international bond of a similar value in the second half of 2017, state news agency MENA quoted Finance Minister Amr El Garhy as saying on Monday.

Egypt had planned to begin a road show for its initial Eurobond issuance in November but later said this may be delayed by some weeks due to market volatility.

The country of over 90 million has been seeking a variety of funding 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.

The central bank abandoned its currency peg of 8.8 pounds to the U.S. dollar on Nov.3 and raised interest rates by 3 percent in a move it hopes will unlock currency inflows and bring back foreign investors who were driven away after a 2011 uprising.

Yields on Egyptian treasuries jumped significantly in auctions following the flotation of the pound and the surprise rate hike but later dropped as demand for government debt rose.

Garhi, who was speaking at a financial conference in Cairo, said foreign investment in Egyptian treasury bills and bonds reached around $500 million in the two weeks following the float, MENA reported.

Earlier this month Egypt secured a $12 billion loan from the International Monetary Fund on conditions that it continue to press on with painful economic reforms, including imposing a value-added tax, cutting electricity subsidies and raising fuel costs.

The reforms, which had already contributed to a rise in Egypt's core inflation, are expected to raise inflation further but Garhi said he expects inflationary pressures to ease in the second half of 2017.

Core inflation jumped to 15.72 percent in October from 13.93 percent a month earlier, although annual urban consumer inflation eased for a second consecutive month after hitting an eight-year high in August.

Garhi told the conference he expects inflation to ease to around 10 percent in the second half of 2017 following the reforms the government has made with regard to adopting a more flexible exchange rate for the dollar.

 

Source: Reuters

 

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