Egypt sets up $12bn bond programme
Cairo, May 28, 2013
Egypt aims to issue its debut sovereign Islamic bond, or sukuk, early next year, which could help ease pressure on its public finances, the prospectus for a new $12 billion bond programme showed.
Cairo has appointed HSBC Holdings and Qatar National Bank as joint lead arrangers and dealers for the programme, the prospectus said.
President Mohamed Mursi approved a law in May that will allow Egypt to sell Islamic bonds. So doing could help cover its gaping budget deficit and boost foreign currency reserves that have fallen sharply since popular uprisings in the North African country more than two years ago.
Egypt plans to issue a sukuk at the beginninag of 2014 to diversify its funding sources, with proceeds earmarked to finance a portion of its budget deficit, the document said. Sukuk are securities structured to adhere to Islamic principles that forbid the payment of interest.
A conventional issue under the programme could materialise before then, however, should market conditions be conducive.
The country is locked in negotiations with the International Monetary Fund over a $4.8 billion loan which is conditional upon the implementation of reforms to control the soaring budget gap.
The bond programme prospectus said the government is continuing to work with the IMF to meet the necessary requirements to secure the loan, without any further details.
Egypt's gross external debt as at December 31 was $33.7 billion, down from $35 billion at the end of 2011, the prospectus said. - Reuters