Egypt is looking to borrow for a rainy — or sunny — day ahead: The Madbouly government wants to secure as much as USD 3 bn in fresh debt financing by the end of the fiscal year through bond issuances and international loans, a senior official at the Finance Ministry told Enterprise on Wednesday. The fresh funds will help bolster the budget and help the country meet any emergency financing needs, the official added.

The funding is set to come from a mix of bond issuances and international loans and is about twice the amount officials had previously telegraphed was coming. The funding includes:

  • USD 1.5 bn from a range of financial institutions;
  • USD 500 mn from Deutsche Bank and the Arab Banking Corporation teased by officials earlier this week;
  • The equivalent of USD 500 mn from the recently-closed panda bond;
  • Another USD 500 mn from an upcoming samurai bond.

Here’s the breakdown:

#1- International financing of USD 1.5 bn is in the works: The Madbouly government is currently negotiating financing worth USD 1.5 bn with a number of international financial institutions, the official told us, stopping short of naming any of the institutions. The official offered no detailed timeline other than that the Finance Ministry wants to have the funds on its balance sheet by the end of the current fiscal year.

#2- Deutsche Bank and ABC are prepping a USD 500 mn loan: The Finance Ministry is in talks to secure two loans worth a combined USD 500 mn from Deutsche Bank and the Arab Banking Corporation (ABC), the official told us, confirming an earlier report in the local press that suggest the documentation on the facilities is now at the House of Representatives’ Legislative and Constitutional Affairs Committee for review. Look for the debt to have a seven-year tenor. Maait previously said that Kuwaiti ins. company Dhaman could guarantee the loan.

Advisors: The Finance Ministry has appointed law firm Helmy, Hamza & Partners — Baker McKenzie's Cairo office — as the local legal advisor in the negotiations, while Reed Smith is acting as the international legal advisor.

#3- Our maiden panda bond issuance, fully subscribed to by Chinese investors, is worth the equivalent of just under USD 500.

#4- Our upcoming JPY-denominated Samurai bond issuance next month is worth the equivalent of USD 500 mn, the Finance Ministry official noted.

PLUS: Could we see a new sukuk issuance in Q1 2024? The Finance Ministry is working towards a new sukuk issuance in Q1 2024 that could raise USD 1 bn, our Finance Ministry source told us, without giving any further details. Our first-ever sovereign sukuk issuance in February raised USD 1.5 bn.

Tags: