Egypt to issue international bonds and diversify currency to hedge against risks

Egypt’s Finance Minister Mohamed Maait on Monday, September 9 stated that the Northern African country plans to issue international bonds worth $3 to 7 billion this fiscal year 2019-2020. Egypt is also interested in diversifying the currencies in which it issues its bonds.

According to the Minister who spoke on the sidelines of the Euromoney conference in Cairo, the plans to diversify its Eurobond currencies to achieve hedging within the portfolio.

On November 11, 2016, the Executive Board of the International Monetary Fund (IMF) approved a three-year extended arrangement for Egypt under the Extended Fund Facility (EFF) for $12 billion, or 422 percent of quota) to support the authorities’ economic reform program. Since then, Egypt has borrowed heavily from abroad and is faced with a tough repayment schedule and a rising bill for oil imports.

Maait said Egypt’s ratio of debt to gross domestic product is on a downward trend and should drop to 77.5 percent by the end of June 2022. The debt-to-GDP ratio was at 9025 percent in the fiscal year that ended in June, he added. However, as of 2016, the IMF noted that issuing sukuk, green bonds, yen or yuan bonds could allow Egypt to attract a new type of investor.

In an interview with Reuters, Maait stated that “we would love to go for yuan and yen. We tried last year, but there are a lot of requirements. We couldn’t get all the requirements done. If we can do it this year, we would love to see Egypt going to these markets.”