Egypt looks to tap Asian debt markets under debt restructuring

Finance Minister Mohamed Maait said Egypt is thinking about issuing bonds in other currencies. (File/Reuters)
Updated 13 October 2018
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Egypt looks to tap Asian debt markets under debt restructuring

  • The plan comes amid efforts to rearrange Egypt’s debt structure as it faces a tough foreign repayments
  • The government is planning to expand its investor base, lengthen maturity of its debt from short term, and seek cheaper borrowing

NUSA DUA, Indonesia: Egypt is considering issuing bonds in currencies other than the euro and the US dollar after launching a roadshow in Asia, Finance Minister Mohamed Maait told Reuters on Saturday, as the government steps up efforts to improve its debt structure.
The minister met investors in Seoul last week and plans to continue the marketing trip to Singapore, Japan and Malaysia among other countries, Maait said in an interview on the sidelines of the International Monetary Fund and World Bank annual meetings in the resort island of Bali.
Egypt raised 2 billion euro in bonds in April, its first issue in the single currency, and is planning to sell more euro-denominated debt next year.
Maait said response from the non-deal roadshow in South Korea was “very positive” and the government had been “advised to try to issue in Asia.”
“We are thinking about issuing in other currencies,” Maait said. “No decision has been made yet, but all options are open and we are considering it and we will make a decision in the near future.”
The plan comes amid efforts to rearrange Egypt’s debt structure as it faces a tough foreign repayments schedule over the next two years, as well as a rising oil import bill.
At the same time, foreign holdings of its government debt have fallen due to outflows amid emerging market turbulence.
In July, the government said foreign holdings of Egyptian treasuries had fallen to $17.5 billion at the end of June from $23.1 billion three months earlier.
The government, which has borrowed heavily from abroad since it drew up an economic reform program with the IMF in 2016, is planning to expand its investor base, lengthen maturity of its debt from short term, and seek cheaper borrowing, Maait said.
Emerging markets have seen bond yields jump in recent months as outflows spiked due to escalating trade tension between the United States and China, and expectation for further hikes in US interest rates as the American economy picks up speed.
In its 2018/19 budget, Egypt is targeting average interest rates for government debt of 14.7 percent, down from 18.5 percent in fiscal year ending June 2018.
To manage the cost of oil imports, Egypt has signed hedging contracts for its oil imports and everything was in place to launch this, the minister said. “We are ready to press the button at any moment,” the minister said.
Egypt is also looking into implementing similar insurance measures for other commodities including wheat, he said.
The country is among the biggest importers of wheat in the world.


UK core pay growth strongest in nearly 11 years, but jobs growth slows

Data showed the unemployment rate remained at 3.8 percent as expected. (Shutterstock)
Updated 16 July 2019
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UK core pay growth strongest in nearly 11 years, but jobs growth slows

  • Core earnings have increased by 3.6 percent annually, beating the median forecast of 3.5 percent
  • The unemployment rate fell by 51,000 to just under 1.3 million

LONDON: British wages, excluding bonuses, rose at their fastest pace in more than a decade in the three months to May, official data showed, but there were some signs that the labor market might be weakening. Core earnings rose by an annual 3.6 percent, beating the median forecast of 3.5 percent in a Reuters poll of economists. Including bonuses, pay growth also picked up to 3.4 percent from 3.2 percent, stronger than the 3.1 percent forecast in the poll. Britain’s labor market has been a silver lining for the economy since the Brexit vote in June 2016, something many economists attribute to employers preferring to hire workers that they can later lay off over making longer-term commitments to investment. The pick-up in pay has been noted by the Bank of England which says it might need to raise interest rates in response, assuming Britain can avoid a no-deal Brexit. Tuesday’s data showed the unemployment rate remained at 3.8 percent as expected, its joint-lowest since the three months to January 1975. The number of people out of work fell by 51,000 to just under 1.3 million. But the growth in employment slowed to 28,000, the weakest increase since the three months to August last year and vacancies fell to their lowest level in more than a year. Some recent surveys of companies have suggested employers are turning more cautious about hiring as Britain approaches its new Brexit deadline of Oct. 31. Both the contenders to be prime minister say they would leave the EU without a transition deal if necessary. A survey published last week showed that companies were more worried about Brexit than at any time since the decision to leave the European Union and they planned to reduce investment and hiring. “The labor market continues to be strong,” ONS statistician Matt Hughes said. “Regular pay is growing at its fastest rate for nearly 11 years in cash terms and its quickest for over three years after taking account of inflation.” The BoE said in May it expected wage growth of 3 percent at the end of this year.