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Egypt Sells $5 Billion Eurobond in Its Largest-Ever Issuance

Mirette Magdy

(Bloomberg) --

Egypt raised $5 billion in its largest-ever issuance in international bond markets, marking the extent of investors’ risk appetite in a recovery from the coronavirus crisis.

The issuance was more than four times subscribed, with total bids of $22 billion, “reflecting the confidence of the international markets in the Egyptian economy,” the Finance Ministry said Friday in a statement. Asian, African, American, European and Middle East investors were among those showing demand, helping the country cut final yields on each of the notes by 50 basis points, the ministry said.

The sale included $2 billion of notes due 2050 at a yield of 8.875% as well as $1.25 billion in four-year notes at a yield of 5.75%, and $1.75 billion in bonds due 2032 at 7.625%.

The Arab world’s most populous nation topped a $2 billion sale in November that included its longest-dated of 40-year notes after securing a fresh batch of cash from the International Monetary Fund.

The latest bonds will cover funding needs for 2020-2021 fiscal year as well as the financing needed to combat the Coronavirus, the ministry said. Some of the country’s main foreign-currency sources, including tourism, remittances and Suez Canal receipts, have plummeted due to the virus outbreak.

Budget Buffers

The North African country wants to use the momentum from securing $2.8 billion in emergency cash from the IMF. The government in Cairo is also seeking more than $5 billion from the Washington-based lender under a separate stand-by arrangement and $4 billion from other sources, an official told Bloomberg last week.

Read More: IMF Emergency Funds Give Egypt Space to Reduce Local Borrowing

“Authorities are moving preemptively to raise additional buffers amid an uncertain global environment,” said Mohamed Abu Basha, the head of macroeconomic research at Cairo-based investment bank EFG Hermes.

BNP Paribas SA, Citigroup Inc., JPMorgan Chase & Co., HSBC Holdings Plc and Standard Chartered Plc arranged Egypt’s latest sale.

(Adds issuance subscription and comments from the finance ministry in second and forth paragraph.)

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