Egypt's Banque Misr Seeks $500 Million Loan to Fund Growth Plans

(Bloomberg) -- Banque Misr, Egypt’s second largest lender, has hired an international bank to manage a $500 million medium-term syndicated loan as it seeks to fund growth through low-cost debt.

The state-run bank is working with the financial adviser to find lenders to underwrite the loan it hopes to secure in the third quarter, Banque Misr’s chairman, Mohamed Eletreby, said in an interview, without naming the bank.

"It’s better to rely now on international loans because their interest rates are good," Eletreby said, adding that’s why Banque Misr decided to postpone plans to issue international bonds to next year.

Banque Misr is planning to expand its operations as the Egyptian government presses ahead with sweeping economic changes aimed at boosting growth, cutting costs and trimming a bloated public sector. Officials are looking to sell stakes in some public companies and banks.

Competitive Rates

To take advantage of competitive interest rates, Banque Misr last month repaid a $200 million long term loan to the Africa Export-Import Bank due in 2020. In its place, it got a three-month renewable $150 million loan from the same lender with a “better” rate, Eletreby said.

It will also next month get the 125 million euro first tranche of a 250 million euro loan it had previously signed with the European Investment Bank to support small and medium-enterprises.

Eletreby said Banque Misr has an abundance of foreign currency after the central bank’s November 2016 decision to float the Egyptian pound to kick-start the economy that had been struggling to rebound after an uprising in 2011. “We don’t have any waiting lists for letters of credit for essential or non-essential goods,” he said.

The International Monetary Fund-backed reforms also call for boosting growth by cutting subsidies and promoting job growth in a nation where the population is growing by around 2.5 million people per year. To help deal with that increase, trimming the bloated public sector is key, and the government has been working on selling stakes in companies and banks such as Banque Du Caire.

Stake sale

Banque Misr is looking boost liquidity through the sale of some of its stakes in public sector firms and lenders, including Banque Du Caire and Cairo Amman Bank, Eletreby said. Several international lenders have shown an interest in buying the 10.78 percent stake it holds in Cairo Amman, and a decision is expected before the end of the year.

The bank also expects to complete the sale of its 2.43 percent stake in Saudi Arabia’s Samba Financial Group in the fourth quarter or first quarter of 2019, he said. The bank has already sold 30 percent of that stake.

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