Egypt issues $4 bln in foreign currency bonds

The ministry said they issued five, ten and thirty year bonds. (AFP)
Updated 20 February 2019
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Egypt issues $4 bln in foreign currency bonds

  • Ministry says the profits will be added to state budget

CAIRO: Egypt has issued $4 billion in dollar denominated bonds with maturities of five, 10 and 30 years in a sale that was five times oversubscribed, the Finance Ministry said on Wednesday.

The issue included $750 million in five-year bonds with a return of 6.2 percent, $1.75 billion in 10-year bonds with a return of 7.6 percent and 1.5 billion in 30-year bonds, with a return of 8.7 percent, the ministry said.

The issue attracted $21.5 billion in bids, the ministry said. The money raised will be used to finance the state budget, said Deputy Finance Minister Ahmed Kouchouk.

Most bids were for longer maturity 10- and 30-year bonds, Kouchouk told Reuters, adding that he considered the yield on the bonds “very good” for Egypt, in line or lower than prevailing yields.

Finance Minister Mohamed Maait said Egypt will return to the international bond market before the end of the fiscal year in June to issue bonds in a currency other than the dollar.

Egypt struggled through years of political and economic turmoil after its 2011 uprising. It has borrowed heavily from abroad since it began an economic reform program backed by the International Monetary Fund (IMF) in late 2016.

Allen Sandeep, head of research at Naeem Brokerage, estimated that as much as $13 billion in Egypt’s principal commitments for the 2019 calendar year are likely to be rolled over. The newly sold $4 billion in dollar-denominated bonds along with another $2-3 billion in non-dollar foreign currencies planned over the coming few months should be enough to cover the rest, he said.

“This year, total external debt dues amount to about $17 billion, is what we hear,” Sandeep said. “For the rest, the issuance would provide a good cushion, making sure the reserve base remains stable, at the least.”


Lufthansa announces overhaul of budget carrier Eurowings

Updated 24 June 2019
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Lufthansa announces overhaul of budget carrier Eurowings

  • Lufthansa cited falling revenues at Eurowings as a major reason for its warning on full-year profits on June 16
  • Eurowings’ long-haul business would be managed by Lufthansa in the future

BERLIN: Lufthansa on Monday announced a turnaround plan for Eurowings in which the budget carrier will focus on short-haul flights and seek a 15 percent cut in costs by 2022 in the hope of returning to profit.
The German airline cited falling revenues at Eurowings as a major reason for its warning on full-year profits on June 16. Eurowings’ revenue was also forecast to fall sharply in the second quarter.
Lufthansa said its Eurowings fleet would be standardized on the Airbus A320 family and it would seek to boost productivity at Eurowings by limiting itself in Germany to one air operator’s certificate.
Brussels Airlines — the Belgian national flag carrier which Lufthansa took control of in 2016 — would not be integrated into Eurowings, Lufthansa said. A turnaround plan for Brussels Airlines will be announced in the third quarter.
Lufthansa also said it would start pegging its dividend payout ratio to net profit in the future to give the group more flexibility. It would pay out a regular dividend of 20 percent-40 percent of net profit, adjusted for one-off gains and losses.
Lufthansa said Eurowings’ long-haul business would be managed by Lufthansa in the future.
Carsten Spohr, Chief Executive Officer of Lufthansa, said Monday’s announcements sent “a clear signal that this company cares about its shareholders and tries to create value for them.”
Lufthansa said its Network Airlines — made up of Lufthansa, Swiss and Austrian Airlines — would aim to use innovations in sales and distribution to make a contribution to increasing unit revenues by 3 percent by 2022.
Network Airlines will aim to reduce unit costs continuously by 1 to 2 percent annually, the airline said.