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UPDATE 3-Egypt plans dollar-denominated Eurobonds issue in Jan-Feb
October 3, 2017 / 1:38 PM / 15 days ago

UPDATE 3-Egypt plans dollar-denominated Eurobonds issue in Jan-Feb

(Adds economist comment, info on European banks)

By Arwa Gaballa

CAIRO, Oct 3 (Reuters) - Egypt plans to issue dollar-denominated Eurobonds between January and February next year, followed by a euro-denominated bonds later, the finance minister said on Tuesday, as the country looks to diversify its funding sources.

Egypt has been negotiating billions of dollars in aid, including a three-year, $12 billion loan programme from the International Monetary Fund to help revive an economy hit by upheaval since a 2011 revolt.

Earlier this year, the government sold $7 billion in five-, 10- and 30-year bonds, part of its return to international markets after turmoil following the ouster of President Hosni Mubarak in 2011.

The dollar-denominated Eurobonds would be worth $3 billion to $4 billion and the euro-denominated issue around 1 billion to 1.5 billion euros, Finance Minister Amr El-Garhy told reporters at a news conference on the budget and tax revenues on Tuesday.

“We’re studying whether there could be a chance for something in November, but I think it would be between January and February,” El-Garhy said. “We may begin with the dollar-denominated Eurobond followed by the euro one.”

Sources told Reuters that Egypt is considering hiring only European banks for its forthcoming euro bond deal.

“Progress with fiscal consolidation, improvement in local and foreign liquidity and contraction in funding gap makes the delay justifiable in our view,” said Hany Farahat, a senior economist at Cairo-based CI Capital.

Deputy Finance Minister Ahmed Kouchouk said the next IMF review visit would be between the end of October and the start of November.

Government interest payments will rise to 410 billion Egyptian pounds from the targeted 380 billion pounds in the current 2017-2018 fiscal year budget, the minister said.

The minister also said tax revenues grew to 464.4 billion Egyptian pounds ($26.3 billion) in the fiscal year 2016-2017 from 352.3 billion pounds ($20 billion) a year earlier. Total government revenues were 659.2 billion pounds, up from 491.5 billion a year earlier.

Egypt’s central bank floated the pound in November, helping the country secure the $12 billion IMF loan, which is tied to reforms such as spending cuts, tax hikes and an overhaul of its subsidy system.

The IMF said in late September Egypt had made a strong start to its reforms, despite waivers for missing targets in June and a greater-than-expected currency depreciation.

The government is expected to get another $2 billion (1.49 billion pounds) IMF loan payment after a year-end review, the Fund said, but inflation remains a risk.

$1 = 17.6300 Egyptian pounds Additional reporting by Sudip Roy; Writing by Patrick Markey; Editing by Larry King

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