Egypt to Launch its Second Zero-Coupon Bonds Next Week

Egypt is planning to launch its second zero-coupon bonds worth EGP 3.164 billion next week.

Egypt’s Finance Ministry announced that it will be offering its second 18-month zero-coupon bonds worth EGP 3.164 billion next Monday Sept 23rd.

This comes in the wake of the Egyptian finance ministry’s successful attempt to raise its 18-month zero-coupon bonds at value of one billion pounds last Monday.

The Finance Ministry issued last Monday its first auction to sell zero-coupon treasury bonds, in which it raised EGP 1 billion at an average yield of 10.745%, amid remarkable turnout by banks.

The bond issue was covered more than three times. Yields on accepted bids ranged between 10.65% and 10.820%.

A zero coupon bond is an interest-free debt security, issued at a discount rate, which will render profit at maturity when the bond is redeemed.

18-Month Zero Coupon Notes Fact Sheet

Issuer: Ministry of Finance

– Security Type: Zero Coupon Bonds

– Issue Size: EGP 3.164 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 23rd , 2013

– Maturity Date: March 23th, 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).