Finance Ministry Launches 10-Year Bonds

Ministry of Finance aims to sell 10-year bonds for the first time since the start of its revolution more than a year ago as borrowing costs level off and the nation moves closer to securing a loan from the International Monetary Fund.

The government will pay a yield of 17.28 percent at today’s auction of 1 billion Egyptian pounds ($166 million) of the notes maturing in April 2022. It last sold similar-maturity bonds in January 2011 at an average yield of 13.04 percent. The nation will also offer 2 billion pounds of three-year securities and 1 billion pounds of seven-year bonds. Today’s sales represent new issuances, rather than re-openings, or roll-overs on maturing debt.

The offering is part of the Finance Ministry’s plan to raise 27.5 billion pounds from bond sales in the fiscal fourth- quarter that started yesterday, 18 percent of its total target. The nation halted the sale of longer-term bonds and resorted to selling shorter-term bills after the start of the revolt that ousted President Hosni Mubarak to avoid paying higher yields.

The 10-year offering is a “positive move because it could signal a return of investor confidence even if the bonds only attract domestic buyers,” Moustafa Assal, head of fixed-income at Cairo-based Beltone Financial, told Bloomberg. The issue of longer-term bonds would provide more stability over short-term treasury bills, he said. The government sold three-years bonds at an average yield of 16.25 percent at the March 26 sale, while the seven-year securities yielded 16.88 percent on March 19. The mid-yield on 10-year bonds in the secondary market was at 16.918 percent yesterday.