Egypt successfully issued $4 billion in Eurobonds on the global bond market, the largest issuance in Egypt and Africa, bridging the funding gap for this fiscal year, finance minister Amr El-Garhy announced on Sunday at a press conference. El-Garhy said that the bond issuance, which he referred to as “unprecedented,” eliminates the funding gap for the current fiscal year 2016-17 as well as a large portion of the upcoming fiscal year. El-Garhy said that the ministry originally aimed to sell 2-2.5 billion in dollar-denominated Eurobonds, but raised it to $4 billion after the approval of four banks. The bonds were listed on the Luxembourg Stock Exchange. Four international investment banks — the French bank Natixis, Citibank, JP Morgan and BNP Paribas — were selected by Egypt last August to run the dollar-denominated Eurobonds. The 12-day road show for the Eurobonds, which started on 17 January, included the UAE's Abu Dhabi and Dubai, as well as New York, Boston, Los Angeles and London, meeting with more than 120 investors, the minister said. There has been great investor appetite and high demand for the bonds, El-Garhy said, adding that “bank officials said that previously there wasn't this much attendance or interest in the bonds by investors.” The minister explained that the Eurobonds are divided into five-year, 10-year and 30-year bonds, with interest rates of 6.12 percent, 7.5 percent and 8.5 percent respectively. Deputy finance minister Ahmed Kouchouk said during the press conference that these interest rates are positive considering Egypt's credit rating, which is at an average of B – from positive to stable – and the fact that it has not been on the bond market for long. Kouchouk said that they received 729 offers for the bonds from Europe, the US, Asia and the Middle East, compared to some 230 in 2015. “We are not only happy with the result, but also with the type kind of investors [involved],” Kouchouk added. He explained that 92 percent of the investors are investment funds or banks, which are long-term investors, while the remaining 8 percent are pension funds and others. When asked about issuing more Eurobonds this year, El-Garhy said that this cannot be decided on now, and that it will depend on the economy's needs later in the year. “This reflects investor trust, especially since we have already implemented concrete steps in our [economic] reform programme, most importantly the devaluation [of the Egyptian pound], which was done by the government and the Central Bank of Egypt,” El-Garhy said. Egypt freely floated its currency against the dollar in November as part of its fiscal reform programme implemented since mid-2014 in an attempt to curb a growing state budget deficit. The reform programme, which also includes cutting subsidies and implementing new taxes, including the value added tax (VAT), was endorsed by the International Monetary Fund (IMF), leading to the Central Bank of Egypt to receive an initial $2.75 billion from a three-year $12 billion loan from the IMF. El-Garhy said today that the bylaws of the VAT will be issued by the ministry in the coming days. Earlier this month, Kouchouk announced that Egypt received over $1 billion over the last two months in foreign investments in governmental debt tools after the floating of the Egyptian pound. Egypt's economy has been struggling since the 2011 uprising, with a sharp drop in tourism and foreign investment — two main sources of hard currency for the import-dependent country.
