Citibank has been instrumental in managing the recent US dollar-bond offering by the Egyptian government over the past few days, in cooperation with investment banks BNP Paribas, JP Morgan, Standard Chartered, and Natixis, according to Mohamed Abdel Kader, Citi Country Officer and Managing Director in Egypt.
Being the largest custodian in the market, Citibank helped in attracting more than 60% of foreign investments in $18-20bn worth government debt instruments .
He pointed out that his bank cooperates with the government significantly in activities such as promoting investment in state assets or promoting Eurobonds that the state issues on international markets.
“Citibank has done a lot of promotional campaigns to attract more investors to Egypt, and we helped in attracting 60% of the $21.5bn invested in Egypt in the form of treasury bonds and bills till early of November,” he said.
Abdel Kader told Daily News Egypt that the issuance of long-term bonds by the Egyptian government was an important step reassuring foreign investors in the Egyptian success story.
“This step came at the right time following the improvement of Egypt’s economic indicators. This was reflected in the number of investors buying bonds,” he stated.
Egypt, represented by the Ministry of Finance, has issued $2bn worth bonds divided into three categories of maturities (4, 12, and 40 years) valued at $500m, $1bn, and $500m, respectively. These bonds come with very good interest rates even lower than the prevailing rates of interest in Egypt’s secondary bond market, in light of the increase in IPO requests by international investors, which attracted over $14.5bn offers in a few hours after the announcement of the issuance in Cairo.
Egypt’s 40-year bond issuance in the longest in North Africa and Middle East. It’s a new success for the Egyptian government aimed at extending the average life of the government debt instruments portfolio and reducing the debt service.
With this long-term issuance, the Ministry of Finance succeeded in returning to the international bond market for the third time in 2019, compared to two issuances during the previous years (February-April), benefiting from the positive conditions witnessed by the international markets at present to cover a part of the needs of the Ministry of Finance for the fiscal year (FY) 2019/20, estimated at $5bn.
Abdel Kader praises this step for two reasons. First, the long-term debt helps the Egyptian government ease the burden on the state budget and reduce the financial obligations of the Egyptian government.
The second reason, as Abdelkader explained, is that the issuance of long-term bonds is a step towards Egypt’s enrollment in global bond indexes.
“If the government lists its securities on this international index or uses the services of Euroclear to secure and settle investments in its securities, it will strengthen Egypt’s position on the international investment map,” he said.
In this context, Abdel Kader added that negotiations are underway by the Egyptian government and are moving steadily to implement the necessary requirements for joining this index.