Egypt Seeks to Diversify Debt Portfolio with Eurobond and Sukuk Offerings

Egypt is poised to re-enter the international bond market, with plans to issue $3 billion in Eurobonds and other debt instruments during the current fiscal year. Finance Minister Ahmed Kouchouk revealed the government's strategy during a recent visit to London, as reported by Bloomberg.

Unlocking New Financing Avenues for Egypt's Economic Growth

Diversifying Debt Instruments to Reduce Borrowing Costs

Egypt's finance ministry is exploring various debt instruments to diversify its funding sources and lower the cost of borrowing. In addition to Eurobonds, the government is considering issuing Islamic bonds (Sukuk) and exploring the possibility of securing guarantees from international financial institutions like the IMF and the BRICS New Development Bank. These measures aim to reduce the interest rates on Egypt's external debt.The country's last Eurobond issuance was in 2021, when it joined a wave of emerging-market governments taking advantage of low borrowing costs before the U.S. Federal Reserve began tapering its pandemic stimulus. At that time, the Ministry of Finance sold $6.5 billion in bonds across two tranches.

Monitoring Egypt's Sovereign Debt Performance

Egypt's dollar-denominated notes due in 2047 have been trading above 80 cents on the dollar as of Friday, the highest level since 2022, according to data compiled by the international news outlet. This positive performance in the secondary market reflects investor confidence in the country's ability to manage its debt obligations.The finance minister's recent comments on diversifying debt instruments are not the first time he has addressed this issue. In August, Kouchouk told media that the finance ministry was exploring the expansion of its debt instruments, including treasury bonds, green bonds, and Sukuk. This strategic approach aims to optimize the country's debt portfolio and reduce the overall cost of financing.

Leveraging International Partnerships to Enhance Borrowing Capacity

The potential use of guarantees from international financial institutions like the IMF and the BRICS New Development Bank could be a game-changer for Egypt's debt management strategy. These partnerships can help the country access more favorable borrowing terms, ultimately reducing the interest rates on its external debt.By diversifying its debt instruments and exploring innovative financing solutions, Egypt is positioning itself to navigate the evolving global financial landscape more effectively. This strategic move aligns with the government's broader efforts to strengthen the country's economic resilience and support its long-term development goals.