Market turmoil fails to derail Egypt’s dollar bond sale

Egypt defied the recent turmoil in global financial markets and issued $4bn of international bonds earlier this week. The sale was three times oversubscribed and the issuance was split into three tranches – $1.25bn was sold at a 5-year maturity, $1.25 at 10-years and $1.5bn at 30-years. Despite the rise in underlying US Treasury yields over the past year (particularly in recent weeks), yields were actually below those Egypt paid at its last dollar bond sale a year ago due to a narrowing of spreads. The proceeds from the sale will provide a further boost to Egypt’s foreign currency reserves – which have doubled since the pound was floated in November 2016 – and, by our estimates, will cover around a tenth of Egypt’s gross external financing requirement over the next year. The sale provides further evidence that investor sentiment towards Egypt is improving on the back of the shift to more orthodox policymaking over the past year or so.