How to purchase bonds in Egypt

The Egyptian government will issue $3 billion in sovereign bonds in a further attempt to boost its declining foreign exchange reserves. It is also an integral part of the Egyptian Economic Restructuring Plan submitted to the IMF for requesting a $12 billion financial assistance package over three years (FY 2016–2018). The issuance will mark Egypt’s return to international borrowing markets after its successful visit in June last year – after a five-year absence. Indeed, last year’s sale of $1.5 billion in 10-year bonds with a 6 percent yield drew in investor orders for more than $4.5 billion. This return to international markets is certainly welcomed, given that the government’s heavy reliance on its domestic debt market in recent years has crowded out private entities’ funding opportunities.

The issuance of new bonds will no doubt be even more well received by the market, given Egypt’s conclusion of a staff-level agreement with the IMF team in mid-August this year. The agreement reflects the government’s interest in adopting more investment friendly and market-oriented policies. Citigroup Inc., JPMorgan Chase & Co., Paris-based Natixis SA and BNP Paribas SA won the tender to manage the issuance process. The first bond issuance is expected in October 2016. The new bond issuance will allow the government to take advantage of the lower borrowing costs that will likely derive from the completion of the IMF negotiations. According to various reports, Egypt is set to offer a 6.5–7.5 percent yield in order to attract investors.