Egypt to Auction EGP1 bln In 18-month Zero-coupon Bonds

Egypt’s finance ministry will be auctioning EGP 1 billion Egyptian pounds ($143 million) in 18-month zero-coupon bonds, the ministry said in a statement.

The notes will be issued on Sept. 10 with a settlement date of T+1. They will be redeemed with a yield attached to their par value in a single payment at their March 10, 2015, maturity, the statement said.

A zero-coupon bond (also called a discount bond or deep discount bond) is a bond bought at a price lower than its face value, with the face value repaid at the time of maturity. It does not make periodic interest payments, or have so-called “coupons”, hence the term zero-coupon bond. When the bond reaches maturity, its investor receives its par (or face) value.

18-Month Zero Coupon Notes Fact Sheet

Issuer: Ministry of Finance

Security Type: Zero Coupon Bonds

Issue Size: EGP 1 billion

Maturity: 18 month (3 coupons periods, i.e. 182×3= 546)

Central Depositary: Misr for Central Clearing, Depositary and

Registry (MCDR)

Issue Date: September 10th, 2013

Maturity Date: March 10th, 2015

Denomination: EGP 1000

Minimum Bid: EGP 1000

Bidding Style: Price basis (similar to current T-Bills auctions)

Coupon Frequency: None

Calculation Methodology: Discount Price Methodology

Days convention: Act/ 365 days

Auction Type: Multiple price auction (American Style)

Submission of bids: Trough the eligible Primary Dealers.

Settlement Date: T+1 for both primary and secondary market

Settlement Price: Percent of the face value extended to the fifth decimal for both primary and secondary market.

Redemption: Yield added to Par Value, single payment on maturity.

Secondary Market: OTC, through Primary Dealers System.

Liquidity Ratio: Will be included in the numerator.

Tax Status: 20% withholding Tax (similar to current Treasury securities).