Egypt issues first dollar-bond sale in two years with $2 billion issuance

Egypt has returned to the international debt market with its first U.S. dollar-denominated bond issuance in nearly two years, Bloomberg reports.

The $2 billion issuance, which took place on Tuesday, included $1.25 billion in five-year notes with an 8.62% yield and $750 million in eight-year notes offering a 9.45% return. Investor demand was strong, with orders nearing $10 billion by the time the terms were finalized, according to a source cited by Bloomberg.

This bond sale comes amid Egypt’s ongoing economic challenges. In March of last year, the country secured a $57 billion bailout package from the International Monetary Fund, World Bank, and the United Arab Emirates. In exchange, Egypt devalued its currency and raised interest rates to address a chronic foreign currency shortage.

The economic strain has continued into 2024, exacerbated by declining revenues from the Suez Canal due to the conflict in Gaza and Houthi attacks on Red Sea shipping routes. The government aims to use bond sales to attract investment and raise capital for crucial infrastructure and development projects.

Finance Minister Mohamed Maait had been signaling a return to the global bond market for months. In addition to this issuance, Egypt is reportedly planning a $1.5 billion sovereign sukuk (Islamic bond) offering later this spring. These bonds, structured according to Islamic financial principles, are expected to appeal to both Muslim and non-Muslim investors.

Goldman Sachs recently projected that Egypt could raise between $3 billion and $4 billion in debt during the first half of the year, according to Bloomberg.