Observers and analysts called on the Egyptian government to wait on issuing international bonds until the vision becomes clearer regarding the future of the US interest rate – especially after it was reduced by 50 basis points last week, amid expectations of further reductions which will aid in lowering the cost of external borrowing.
This comes after Egypt’s Finance Minister Ahmed Kouchouk informed foreign investors in London earlier in September that the government is preparing to issue international bonds and other debt instruments worth three billion dollars in the current fiscal year, which ended late June, according to Bloomberg reports citing sources familiar with the matter.
Kouchouk did not mention further details about the planned offering and the timetable, or whether it was an alternative to the expected offering of sukuk and other debt instruments in the local market.
Informed government sources said that no procedures for the offering had been initiated, nor had a final date been set, nor have advisors been selected, etc, ruling out the completion of the offering before the vision becomes clear regarding a further decline in the US interest rate to reduce the cost of return on the government in issuing bonds.
The head of the Planning and Budget Committee in the House of Representatives, Fakhry al-Fakki, predicts that the offering will come in three tranches to benefit from the decline in interest rates, stressing that this approach comes to bridge the financing gap estimated at about US$ 10 billion.
Fakki said that this intended offering is the first since 2021, and called on the government to take its time to benefit from the decline in US interest rates, expecting it to be offered in Europe especially in London.
He added that these bonds are part of the lending program, which he expects will be offered within nine months.
Economic expert Medhat Nafeh explained that in principle, there is nothing wrong with the trends targeting the foreign lending market at a lower cost, as long as the cost of treasury bills is higher.
He continued: “I think we should wait in issuing dollar bonds in international markets until interest rates return to levels closer to their usual averages, which contributes to reducing the cost of lending.”
Edited translation from Al-Masry Al-Youm
