What are international dollar bonds and why did Egypt offer it for the second time this year?


Yesterday, Thursday, the Ministry of Finance offered international dollar bonds worth $3 billion, as the Ministry of Finance was able to implement the offering in three tranches (6-12-30 years) with issued values ​​of $1.125 billion, $1.125 billion, and $750 million, respectively. The second offering is during 2021, and the first offering is during the current fiscal year 2021/2022.The last offering was last February, when the Ministry of Finance announced the implementation of an international bond offering worth $3.750 billion in three tranches (5, 10 and 40 years).

Al-Shorouk explains the meaning of offering international bonds, and what is the purpose of offering these bonds?

What are dollar bonds?

They are securities against which the government borrows money from the international market, which are due for repayment after a certain period of time and the interest rate is determined by the issuer of the bonds, and helps in achieving diversification of funding sources and financing the needs of the state’s public treasury.

Why did Egypt put up international dollar bonds?

Mohamed Maait, Minister of Finance, said that this offering will provide additional financial resources from foreign exchange for the country, and will provide financial resources that contribute to financing part of the financing needs of the budgetary organs. One trillion pounds, compared to 997.733 billion pounds in the fiscal year ending last June, an increase of 6.31%.

The minister added that the latest issuance contributes to prolonging the life of the Egyptian government debt portfolio, which helps improve the indicators of the sustainability of government debt, which increases investors’ confidence in the continuation and improvement of the sustainability of Egypt’s public financial conditions and government debt.

What is the interest rate on those bonds in the last offering?

The Ministry of Finance offered bonds in three tranches with time periods (6 -12-30 years) at interest rates of 6.125%, 7.625% and 8.875%, respectively, and with the increasing demand from investors, as the volume of subscription requests by foreign investors reached more than $9 billion, interest rates were reduced to 5.800% for 6-year bonds, 12-year bonds with an interest rate of 7.300%, and 30-year bonds at an interest rate of 8.750%.

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