Egypt-tied note issuance hits record
cairo — Investors are rushing back to structured notes tied to Egypt following a currency float and an International Monetary Fund (IMF) loan last quarter, six years after a revolution that had scared them off.
Citigroup issued all four of the recorded credit-linked notes this month raising a total of 2.3 billion Egyptian pounds ($121 million), the most for a single month on record, according to data compiled by Bloomberg. The biggest was a one-year zero coupon security sold at about 84 per cent of face value.
The deals come just as Egypt’s government raised $4 billion in international debt markets on Tuesday, its first such issuance since it floated its currency in November. The offering was oversubscribed, Finance Minister Amr El-Garhy said on Bloomberg TV, as fund managers competed to invest in Africa’s third-largest economy amid growing confidence spurred by the $12 billion IMF loan. The fund released details of the conditions on that lending last week in a report. “The staff report from the IMF suggests things are heading in the right direction for Egypt,” said Bilal Khan, senior economist for Middle East, North Africa and Pakistan at Standard Chartered Plc in Karachi.
“There’s political commitment to implement a reform programme.” Egypt’s 12-month local-currency treasury bills yield about 20 per cent. Those rates and the pound’s more than 50 percent plunge since November 1 to about 18.72 per dollar on Friday have attracted global fund managers, according to Richard Lancaster, managing director in emerging markets credit trading for central and eastern Europe, Middle East & Africa at Citigroup. “Given the large recent depreciation of the pound coupled with high yields I would expect further flows to the domestic debt market this year,” he said.— Bloomberg