- Yield on Egypt's 10-year term global notes decreased significantly in four months by 0.85%
- Vice Minister of Finance: 370 investors sought to buy Egyptian notes with yields less than interests of many emerging-market notes of higher credit grade
Finance Minister, Mr. Amr Al-Garhy, announced that Egypt has made a comeback to international markets through additional offering of Egypt dollar notes last January. Within few hours since the Ministry's announcement of an offering of US$ 3 billion worth of notes on 24th of May 2017, more than 11 billion purchase requests were received. This significant turnout is deemed the greatest ever for any emerging market when re-offering its notes in markets.
The Ministry of Finance has successfully issued 30-year term notes worth US$ 1.25 billion, 10-year term notes worth US$ 1 billion and 5-year term notes worth US$ 750 million, with an initial annual yields of 7.95%, 6.65% and 5.54%, respectively.
Borrowing costs of Egypt dollar notes declined significantly by 0.55% down to 0.85% in comparison with last January's issued notes, which consequently reflects investors' regain of trust on the momentum and outlook of the Egyptian economy, noted Mr. Al-Garhy.
Egypt managed in four months to issue global notes worth US$ 7 billion while foreign investors purchase requests valued nearly US$ 24.5 billion, thus maintaining a mere ratio of 30% for issued notes to real purchase requests, and manifesting the huge turnout of international mutual funds on Egypt dollar notes, confirmed Mr. Al-Garhy.
Main catalysts for foreign investors' bullish outlook towards the Egyptian economy and Egyptian economic reform program are highlighted by Finance Minister as follows: the decrease of the State's budget deficit and initial deficit to GDP, improvement of trade balance indicators, retrieval of inflows of foreign investors' purchases of government securities, the increase of foreign reserves, the decline of unemployment rate and the development of manufacturing sector.
Moreover, the minister noted, the note offerings coincided with the agreement concluded with the IMF following the first review of the Egyptian economic reform program which will consequently open the way for Egypt to get the 2nd tranche of the IMF loan worth US$ 1.25 billion.
On his part, Mr. Ahmad Khoucouk, Vice Minister of Finance for Fiscal Policies, noted that as many as 370 investors and foreign investment funds responded positively on the recent offering of the Egyptian dollar notes as such: 52% purchases by European funds, 38% by American funds, and all the rest by Asian and Middle East investors.
He illustrated that revenues of the notes would be allocated for refinancing the State's budget deficit for the new FY 2017/2018, as well as for paying some of the government's short-term and most costly foreign debt.
He reiterated that yields on the recently issued Egyptian notes were lower than those offered by emerging-markets' notes of higher credit grades, thus emphasizing the great trust of foreign investors in the potentialities and prospects of the Egyptian economy.