Egypt looks to tap Asian debt mar­kets un­der debt re­struc­tur­ing

Iran Daily - - Tse & Global Economy -

Egypt is con­sid­er­ing is­su­ing bonds in cur­ren­cies other than the euro and the US dollar af­ter launch­ing a road­show in Asia, Fi­nance Min­is­ter Mo­hamed Maait told Reuters on Satur­day, as the govern­ment steps up ef­forts to im­prove its debt struc­ture.

The min­is­ter met in­vestors in Seoul last week and plans to con­tinue the mar­ket­ing trip to Sin­ga­pore, Ja­pan and Malaysia among other coun­tries, Maait said in an in­ter­view on the side­lines of the In­ter­na­tional Mon­e­tary Fund and World Bank an­nual meet­ings in the re­sort is­land of Bali, Reuters wrote.

Egypt raised €2 bil­lion in bonds in April, its first is­sue in the sin­gle cur­rency, and is plan­ning to sell more euro-de­nom­i­nated debt next year.

Maait said re­sponse from the non-deal road­show in South Korea was very pos­i­tive and the govern­ment had been ‘ad­vised to try to is­sue in Asia’.

“We are think­ing about is­su­ing in other cur­ren­cies,” Maait said.

“No de­ci­sion has been made yet, but all op­tions are open and we are con­sid­er­ing it and we will make a de­ci­sion in the near fu­ture.”

The plan comes amid ef­forts to rear­range Egypt’s debt struc­ture as it faces a tough for­eign re­pay­ments sched­ule over the next two years, as well as a ris­ing oil im­port bill.

At the same time, for­eign hold­ings of its govern­ment debt have fallen due to out­flows amid emerg­ing mar­ket tur­bu­lence.

In July, the govern­ment said for­eign hold­ings of Egyp­tian trea­suries had fallen to $17.5 bil­lion at the end of June from $23.1 bil­lion three months ear­lier.

The govern­ment, which has bor­rowed heav­ily from abroad since it drew up an eco­nomic re­form pro­gram with the IMF in 2016, is plan­ning to ex­pand its in­vestor base, lengthen ma­tu­rity of its debt from short term, and seek cheaper bor­row­ing, Maait said.

Emerg­ing mar­kets have seen bond yields jump in re­cent months as out­flows spiked due to es­ca­lat­ing trade ten­sion be­tween the United States and China, and ex­pec­ta­tion for fur­ther hikes in US in­ter­est rates as the Amer­i­can econ­omy picks up speed.

In its 2018-19 bud­get, Egypt is tar­get­ing av­er­age in­ter­est rates for govern­ment debt of 14.7 per­cent, down from 18.5 per­cent in fis­cal year end­ing June 2018.

To man­age the cost of oil im­ports, Egypt has signed hedg­ing con­tracts for its oil im­ports and ev­ery­thing was in place to launch this, the min­is­ter said.

“We are ready to press the but­ton at any mo­ment,” the min­is­ter said.

Egypt is also look­ing into im­ple­ment­ing sim­i­lar in­sur­ance mea­sures for other com­modi­ties in­clud­ing wheat, he said.

The coun­try is among the big­gest im­porters of wheat in the world.

Fi­nance Min­is­ter Mo­hamed Maait REUTERS

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