Egypt faces tougher sell on second post-Arab Spring Eurobond

Aside from the market turmoil stemming from China’s shock devaluation and looming U.S. interest-rate increases, the North African country has dwindling foreign-currency reserves and an overvalued currency to deal with. Still, with $2.9 billion of debt to repay by January, equivalent to about 16 percent of reserves, and aid from its Gulf Arab allies running out, selling dollar bonds looks unavoidable.

That probably means incurring a bigger premium than the 369 basis points above Treasurys that Egypt paid to raise $1.5 billion in June. The yield on those bonds has risen 12 basis points since the debt was sold even as the rate on equivalent U.S. debt slid and a gas discovery by Eni SpA in Egyptian waters cut 30 basis points from borrowing costs last week. Egypt plans to sell as much as $1.5 billion of international bonds by year-end, the nation’s debt chief said Monday.