Egypt’s Ministry of Finance has successfully returned to the international bond market despite the uncertainty in global financial markets caused by the novel coronavirus (COVID-19) pandemic.
The ministry has successfully implemented the issuance of international bonds worth $3.75bn in three tranches, covering terms of 5, 10, and 40 years, with values of $750m, $1.5bn, and $1.5bn, respectively.
In a statement, the Ministry of Finance said that the offering witnessed strong and increasing purchase requests by foreign investors. The volume of subscription applications from these investors reached $16.5bn, before the banks promoting the offering announced the reduction of the advertised indicative returns prices on bonds at the beginning of the offering.
This came as a result of strong buying orders from a large number of large international investors in international bonds.
Minister of Finance Mohamed Maait confirmed that the significant and increasing demand for Egyptian international bonds represents a coverage ratio of up to 4.4 times the value of the offering.
This has contributed to lowering interest rates to less than previous issuances that took place during the past few years. Moreover, the interest rates achieved are significantly lower than the interest rates recently achieved by many countries with similar credit ratings, and countries with a higher credit rating than Egypt, in some cases.
This confirms the increasing confidence of investors in the capabilities and potential of the Egyptian economy, due to the continuous good results achieved over the past years.
The success of this offering provides additional foreign exchange resources for the country, whilst also providing financial resources that contribute to financing the needs of budgetary bodies at low prices.
Maait said that Egypt’s successful return to international markets, despite the challenges, reflects investors’ confidence in the capabilities and performance of the Egyptian economy.
Deputy Minister of Finance for Financial Policies, Ahmed Kouchouk, said that the strong interest in offering Egyptian international bonds has enabled the country to successfully issue international bonds of the required volume. It also achieves the lowest possible interest rate on the offered international bonds.
He noted that the offering witnessed more than 400 investors apply to buy and subscribe to Egyptian international bonds, of whom 40 new investors subscribed to such bonds for the first time.
This is a continuation of the Ministry of Finance’s approach, which aims to expand and diversify the investor base of Egyptian international bonds.
Furthermore, purchase orders came in a wide variety that reflects the desire of a large number of investors from all geographical regions of the world, including the United States, Europe, Asia, the Middle East and Africa. This has allowed a strong and diversified volume of applications that has eventually helped the Ministry of Finance to reduce interest rates on the bonds offered by 37.5 basis points for the three tranches, compared to the indicative prices announced at the beginning of the offering process.
The issuance was also made without adding a new issue bonus to the interest rates issued for the three tranches. In fact, the interest rates achieved on bonds with maturities of five and 10 years were lower than the prevailing prices at the secondary market before the offering.
It is a very good indicator which reflects the investors’ desire to participate strongly in the offering and invest in Egyptian international bonds.
He explained that the return on five-year bonds amounted to 3.875% with an opening return of 4.25% declared to investors. At the same time, a 5.875% return was placed on the 10-year bonds with an opening return of 6.25%, and the return for 40-year bonds stood at 7.50% with an opening return of 7.875%.
Deputy Minister of Finance for Financial Policies, Ahmed Kouchouk, said that the strong interest in offering Egyptian international bonds has enabled the country to successfully issue international bonds of the required volume. It also achieves the lowest possible interest rate on the offered international bonds.
He noted that the offering witnessed more than 400 investors apply to buy and subscribe to Egyptian international bonds, of whom 40 new investors subscribed to such bonds for the first time.
This is a continuation of the Ministry of Finance’s approach, which aims to expand and diversify the investor base of Egyptian international bonds.
Furthermore, purchase orders came in a wide variety that reflects the desire of a large number of investors from all geographical regions of the world, including the United States, Europe, Asia, the Middle East and Africa. This has allowed a strong and diversified volume of applications that has eventually helped the Ministry of Finance to reduce interest rates on the bonds offered by 37.5 basis points for the three tranches, compared to the indicative prices announced at the beginning of the offering process.
The issuance was also made without adding a new issue bonus to the interest rates issued for the three tranches. In fact, the interest rates achieved on bonds with maturities of five and 10 years were lower than the prevailing prices at the secondary market before the offering.
It is a very good indicator which reflects the investors’ desire to participate strongly in the offering and invest in Egyptian international bonds.
He explained that the return on five-year bonds amounted to 3.875% with an opening return of 4.25% declared to investors. At the same time, a 5.875% return was placed on the 10-year bonds with an opening return of 6.25%, and the return for 40-year bonds stood at 7.50% with an opening return of 7.875%.
