Egypt to raise maximum issuance of dollar bonds to up to $7 billion

Egypt is to raise the maximum amount of dollar bonds it can issue on international markets to $7 billion, a Cabinet statement said.

The present $5 billion cap will be increased by up to $2 billion, the statement said.

It said the Egyptian Ministry of Finance was seeking to obtain additional financing in the face of a rise in interest rates on the domestic market and to increase U.S. dollar reserves held by the central bank.

“The government’s current trend is to replace domestic borrowing by external borrowing in order to reduce the cost of borrowing as local interest rates rise,” Reham El Desoki of Arqaam Capital told Reuters.

“The government’s decision today to raise the ceiling on the issue of international bonds comes amid expectations of the issuance of bonds worth $3 billion at the end of this year.”

In February, Egypt’s central bank raised $4 billion from a Eurobond sale, twice as much as it initially targeted and at lower yields than expected.

Egypt has been seeking a variety of funding sources, from development loans to foreign grants and aid, to plug its financing needs as it struggles with an acute dollar shortage that has hampered its ability to import.

The country’s dramatic decision to float its currency in November — roughly halving its value overnight — along with a three-year $12 billion IMF programme attached to sweeping reforms have been widely praised by economists and investors.

Source: Reuters