Egypt sells $3 billion bills amid lower investor turnout

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Egypt’s ministry of finance said that it sold USD bills of three categories at $3 billion, and reduced the interest on all categories, in its first bill rollout of the new fiscal year and the second in 2021. The ministry added in press statement that bills are categorised according to their terms; $1.125 billion for six years, $1.125 billion for 12 years, and $750 million for 30 years.

The deputy minister for financial policies, Ahmed Kojak, pointed out that the interest rate of the six-year-term bills is 5.8 per cent, 7.3 per cent for 12-year-term bills, and 8.7 per cent for 30-year-term bills.

A bank’s document issued by one of the banks, which participated in the deal, revealed that the total debt’s cost reached $3.3 billion aside from the $3 billion principal. The sale witnessed lower turnout from the investors in comparison with two previous bill rollouts Egypt made in February 2021 and May 2020, and reaped $3.75 billion and $5 billion respectively. This came after the coverage ratio dropped four times off the previous rollouts, resulting in lower interest rates for this bill rollout.

Financial experts attributed the lower turnout partially to the increase of foreign debt up to $134.8 billion in March, according to the Central Bank of Egypt. Egypt used to get its way to the international debt markets to finance its governmental budget deficit, which is expected at 6.6 per cent in this fiscal year, which is to end in June 2022.

Earlier, the Egyptian Finance Minister Mohamed Mait, stated that Egypt could issue USD or EUR bills, and it could also rollout more green bills before the end of the current fiscal year. Mait added that Egypt aspires to issue it first sovereign bonds in 2022, with a total value of $500 to $700 million. Standard and Bores warned, early in September, of the risks of the Egyptian foreign debt in regard to presenting the highest true interest rate in the world. According to the US financial research agency, the risks include exit of the investors’ money, which is worth $33 billion, that is 13 per cent of the total securities in Egypt, in case of increase of interest rates in US stock exchanges.