Egypt has priced a $1.5bn dual-tranche sukuk issuance that drew more than $9bn in orders, with the issuance set to be completed on Oct. 7, the finance ministry said on Wednesday.
The ministry said in a statement that the first tranche consists of a 3.5-year, $700m sukuk with a yield of 6.375%, maturing in 2029. The second tranche is a 7-year, $800m sukuk with a yield of 7.950%, maturing in 2032.
This represents an average financing cost of 7.2% for an issuance with an average tenor of 5.25 years, a yield lower than the current prevailing yield of 7.5% on Egypt’s 5-year sovereign Eurobonds in the secondary market, the ministry said.
The 3.5-year tranche was priced with a spread about 20 basis points lower than the price of Egyptian bonds of the same tenor in the secondary market, while the 7-year tranche was priced with a spread 35 basis points lower than the yield on 7-year bonds.
The finance ministry stated that it is moving forward with its ambitious strategy to improve government debt indicators. This strategy focuses on diversifying financing tools and sources, expanding the investor base to reduce financing costs and extend the debt maturity, while continuously working to sustainably reduce external debt on an annual basis.
