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Yield Hunters Flock to Egypt as It Sells $2 Billion Eurobond

Egypt Lures Yield Hunters With Longest Dollar Bond on Record

(Bloomberg) --

Egypt sold its longest-dated Eurobond on record Wednesday, part of a $2 billion deal, as the Arab world’s most populous nation seized on appetite for riskier assets to spread out its debt burden.

The issuance was seven times oversubscribed, with total bids of $14.5 billion, “reflecting the confidence of the international community” in Egypt’s economic reforms, the Finance Ministry said Thursday in a statement. Asian and Middle Eastern investors were among those showing increasingly strong demand, it said.

As well as a $500 million 40-year segment, Egypt placed $1 billion of notes maturing in January 2032 and $500 million of four-year securities. The longest tranche yielded 8.15%, lower than initial talk of around 8.6%. The 2032 notes priced at 7.05% and the shortest bonds at 4.55%.

Yield Hunters Flock to Egypt as It Sells $2 Billion Eurobond

Among governments, only Ghana, Ecuador and Egypt itself -- in February -- have sold dollar bonds this year with yields above 8%.

Egypt has been Africa’s biggest Eurobond issuer since it embarked on a reform program backed by the International Monetary fund in late 2016. The government has taken advantage of demand for emerging-market debt caused by monetary easing by the world’s major central banks. The latest bonds will cover part of the country’s estimated $5 billion of financing needs for the 2019-20 fiscal year, the ministry said.

Egypt has sold $8.2 billion of dollar and euro securities so far in 2019, about 40% of Africa’s total of $20.8 billion, according to data compiled by Bloomberg. Egypt sold $9 billion in foreign debt last year.

The Finance Ministry has said it plans to reduce its debt load to 80% of gross domestic product by June 2022, from 92% in June this year. It also wants to more than double the average maturity of its sovereign securities to around four years by June 2020.

To that end, the government will raise the share of longer-dated debt to 40% of annual domestic issuance by the end of the current fiscal year begun in July, from 5% in 2017-2018, Finance Minister Mohamed Maait said in an interview last month.

BNP Paribas SA, Citigroup Inc., JPMorgan Chase & Co., Natixis SA and Standard Chartered Plc arranged Egypt’s latest sale.

--With assistance from Michael Gunn.

To contact the reporters on this story: Mirette Magdy in Cairo at mmagdy1@bloomberg.net;Lyubov Pronina in Brussels at lpronina@bloomberg.net

To contact the editors responsible for this story: Hannah Benjamin at hbenjamin1@bloomberg.net, Alex Nicholson, Paul Wallace

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