Egypt weighs issuing local-currency bond

International market facility part of efforts to boost overseas inflows, cut borrowing costs

Egypt is considering issuing local currency-denominated bonds on the international market in an effort to boost overseas inflows and reduce the cost of borrowing, four people familiar with the matter said.

While investors would purchase the bonds in dollars, the principal and interest would be payable in Egyptian pounds, which means the buyer bears the risk of any fluctuation in the exchange rate, said the people.

A pound-denominated international bond is one of a number of options Cairo is considering as it seeks to diversify its funding sources and reduce the mounting cost of debt servicing. The Finance Ministry didn’t respond to requests for comment.

Demand for Egyptian domestic debt fell this year as volatility swept through emerging markets. About $7 billion (Dh25.7 billion) flowed out of local treasury bills in the five months from the end of March.

With faltering demand spurring an increase in yields across the board, the country is seeking to minimise its borrowing costs by relying more on longer-term international bonds than expensive treasuries.