NBE does not intend to issue bonds on foreign markets: vice chairperson

Hossam Mounir
4 Min Read

The National Bank of Egypt (NBE) has no plans to offer the foreign bonds that were announced earlier, said Yehia Aboul Fotouh, vice chairperson of the NBE.

He told Daily News Egypt that the bank is delaying this step until the improvement of international markets and Egyptian economy conditions so that the bonds could be offered with a suitable return.

The irregular general assembly of the NBE has approved in March 2015 the issuance of dollar bonds on global markets before the end of June 2015, and the bank invited 13 international financial institutions to compete over the promotion of this issuance, and only five institutions were selected.

The bank held several meetings with representatives of international banks that were nominated to promote these bonds in international markets to discuss their offers and choose the best one, in preparation for the issuance of those bonds.

These banks include Citigroup, Deutsche Bank, HSBC, National Bank of Abu Dhabi, and Standard Chartered.

In August 2010, the NBE had issued bonds worth $600m on global markets, with a 5.25% interest rate.

The bank was expected to issue the bonds in the first quarter of 2017, but it has not been done so far, according to previous remarks by the bank’s chairperson Hisham Okasha.

Abu Al-Fotouh noted that the interest rate of the bonds issued by the government recently were less than the previous offering, which reflects the increasing confidence of international institutions in the Egyptian economy, and indicates that any future Egyptian bonds will be issued with a lower interest rate.

In January 2017, the Egyptian finance ministry has issued bonds on the international markets collecting $4bn.

The first tranche of these bonds was issued at a value of $1.750bn with a yield of 6.125%, due on 31 January 2022. The second tranche worth $1bn with a yield of 7.5%, due on 31 January 2027, and the third one worth $1.25bn with a yield of 8.5%, due on 31 January 2047.

On 31 May 2017, the ministry raised another $3bn worth bonds, where the yield on those bonds declined significantly, as $750m bonds that are due on January 31, 2022, were issued with a yield of 5.45%.

Other 10-year bonds worth $10bn maturing on 31 January 2027 were issued with a yield of 6.65%, in addition to $1.25bn bonds due on 31 January 2047 with a yield of 7.95%.

The NBE was planning to issue a number of bonds on the international markets to increase its foreign exchange resources, however this plan changed completely after the liberalization of the exchange rate, said Abu Al-Fotouh.

He pointed out that the bank’s foreign exchange earnings have exceeded $9.5bn since last week, while the last week’s results were not calculated, although there are indications that they have increased significantly. Gamal Negm, deputy governor of the Central Bank of Egypt (CBE), said last Friday that foreign banks’ total foreign exchange earnings amounted to about $2bn.

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