Egypt plans to issue up to USD 4 bn in international bonds over the next year to help address its USD 11 bn external financing gap, Finance Minister Ahmed Kouchouk said, according to Bloomberg.

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The details: The planned issuances could include EUR- and USD-denominated securities, sustainability bonds, sukuk, and even CNY- or JPY-denominated instruments,Kouchouk said. These issuances would cover about 40% of the country’s external funding needs. The remainder is expected to come from concessional financing.

SOUND SMART- “Issuing new USD bonds could prove expensive. Egypt’s USD bonds trade at an average yield of 9.3%,” Bloomberg writes.

More in the pipeline: Authorities are also mulling EGP-denominated sukuk and retail bonds for the domestic market this fiscal year to offer new savings instruments and increase liquidity. Moreover, the country is working to rejoin JPMorgan’s bond index and is in talks with Euroclear to facilitate foreign access to the local debt market, both of which aim to attract fresh inflows.

REMEMBER- Egypt was dropped from the index in January, 2024 due to persistent FX shortages in the country at the time that prevented investors from repatriating returns. This was not the first time we were put back on the list, as Egypt rejoined the index in early 2022 after having been kicked out for over 10 years because of the economic turmoil following the 2011 revolution. Egypt hopes to be added once again to JPMorgan’s Government Bond Index-Emerging Markets by 2026, especially with the gradual improvement of the exchange rates and other crucial economic indicators, a government source told EnterpriseAM earlier this summer.

Not our first effort to close this gap: Last month, the Finance Ministry completed a USD 1bn sovereign sukuk issuance on the Vienna Stock Exchange via private placement, which was fully subscribed by Kuwait Finance House.

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