The Finance Ministry plans to issue zero-coupon bonds in early February for the first time in nearly two years, a senior government official told EnterpriseAM. The move comes as the ministry seeks to capitalize on Egypt’s improved credit rating and a broader strategy to diversify debt instruments and reduce debt-servicing burdens, the source said.

Why it matters: The plan is designed to give the state’s finances some more breathing room, with the EGP 35 bn zero-coupon bond program set to have an average maturity of two years — up from the 18-month tenor previously. Because zero-coupon bonds are sold at a discount and pay no periodic interest, the move pushes the state’s debt servicing burden down the line for a whole 24 months. Considering debt service costs consumed over 96% of the state’s budget revenues in the first five months of the fiscal year, you can see why the ministry is making the move.

The ministry also plans to re-issue five-year fixed-rate bonds for the first time since the start of the fiscal year, totaling EGP 45 bn over multiple tranches. This shift to a five-year reflects investor confidence in long-term economic conditions, the source said.

The two planned programs align with a broader strategy to gradually increase average debt maturity to 4.5–5 years, up from the current 1.7 years, to mitigate refinancing risks.The introduction of the programs also coincides with the ministry raising its borrowing target for the third quarter of the fiscal year to EGP 2.7 tn, up from EGP 2.5 tn the quarter before, to meet local obligations.

What’s next? The Finance Ministry will unveil its 2026-2030 public debt strategy by the end of the month, our source told us.

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