Egypt expects its debt to become ‘euroclearable’ in October -minister

Central Bank of Egypt's headquarter is seen in downtown Cairo, Egypt September 18, 2018. (Reuters)
Updated 14 April 2019
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Egypt expects its debt to become ‘euroclearable’ in October -minister

  • Egypt hopes to announce a new sovereign debt issue by the end of September, minister says

CAIRO: Egypt has signed an agreement with Euroclear, Europe’s biggest settlement house for securities, to allow holders of its sovereign debt to clear transactions outside the country beginning in six months’ time, its finance minister said.
Mohamed Maait also told Reuters that Egypt hopes to announce a new sovereign debt issue by the end of September and hopes it will be eligible for clearing via Belgium-based Euroclear.
“Hopefully by October this year, we will be starting to launch the first part of our debt, (making it) euroclearable,” Maait said in a phone interview late on Saturday.
The government is considering issuing “green bonds, samurai, panda, sukuk and infrastructure bonds,” he said.
Maait was speaking from Washington, where treasury officials from around the world have gathered for the spring meetings of the World Bank and International Monetary Fund.
Euroclear is due to officially announce its memorandum of understanding (MoU) with Egypt on Monday, a source familiar with the matter said.
Euroclearability is seen as one of the last stages of capital market development and can sharply lower borrowing costs for emerging market economies, says PwC.
The deal will help “create the right market conditions for local currency sovereign debt issuance,” according to a draft Euroclear press release, seen by Reuters and due to be published on Monday.
“The intention is for the market to eventually become Euroclearable, creating a cross-border link to enable international investment in Egyptian domestic debt instruments,” the release said.
Settling debt via Euroclear requires high levels of transparency as well as specifics on the size and structure of the debt to be issued, among other aspects under Euroclear rules.
In February Egypt sold $4 billion in dollar-denominated eurobonds and this month it issued 2 billion euros ($2.3 billion) in euro-denominated bonds.
Maait also said in the interview that Egypt plans to sell stakes in at least another five or six state-owned enterprises (SOEs) by the end of June 2020.
It plans to use the proceeds from stake sales to help boost public finances as part of a three-year economic reform program agreed with the IMF in late 2016. Egypt received a $12 billion loan from the IMF.
The government sold 4.5 percent of Eastern Company, Egypt’s monopoly cigarette maker, in March, its first sale of state-owned shares on the stock exchange in 10 years.
The sale had been planned for last year, but was delayed after prices of emerging market assets plunged across the globe.
“We are on track. We may say something before June 2019, but definitely, God willing, we will say more with the new financial year,” Maait said on the SOEs. Egypt’s financial year begins in July.
He declined to say which company would be offered next because “it hurts us when we announce early.”
Maait said Egypt has put a mechanism in place for hedging against fluctuating oil prices, a move aimed at helping avoid shocks to the budget.
“Egypt is ready and Egypt is using the hedging mechanism whenever Egypt needs to use it,” he said.
A plan for hedging against wheat prices that was under discussion with banks in October “didn’t materialize,” but remains “on the table” and is being explored, he said.
Euroclear’s global head of capital markets and fund services, Stephan Pouyat, told Reuters that Euroclear’s agreement with Egypt would be expanded in future.
“We are not just going to do the government bonds. We will start by that, because that’s what international investors need,” Pouyat said.
He said Euroclear wants to “make it clear (to investors) that (Egypt) has a successful, long yield curve to create the benchmark that is necessary for the corporate sector ... and that is going to facilitate significantly any sort of hedging.”
($1 = 0.8849 euros)


China’s crude oil imports from Saudi Arabia up 43%

Updated 25 May 2019
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China’s crude oil imports from Saudi Arabia up 43%

  • Imports grew to 1.53 million barrels per day compared with 1.07 million a year ago
  • Sinopec Group and China National Petroleum Corp., the country’s top state-owned refiners, are halting Iranian oil purchases for loading in May, three people with knowledge of the matter said

BEIJING: China’s crude oil imports from Saudi Arabia rose 43 percent in April, making the Middle Eastern OPEC kingpin once again the top supplier to the world’s second-biggest economy, boosted by demand from new private refiners.
Saudi imports grew to 6.30 million tons, or 1.53 million barrels per day (bpd) on a daily basis, compared with 1.07 million bpd in the year ago period, according to data from the General Administration of Customs released on Saturday.
Saudi shipments were supported by higher refinery run rates at Hengli Petrochemical Co. Ltd, with production at the 400,000 bpd-capacity refinery in northeast China expected to reach optimal levels in late June. About 70 percent of the feedstock for Hengli came from Saudi Arabia.
Meanwhile Russian supplies were 6.12 million tons, or 1.49 million bpd, up from 1.35 million bpd in April last year.
China in April imported 3.24 million tons of crude oil from Iran, or 789,137 bpd, up from March’s 541,100 bpd, as companies ramped up buying before the scrapping of sanctions waivers the US had granted to big buyers of Iranian oil.
China Petrochemical Corp. (Sinopec Group) and China National Petroleum Corp. (CNPC), the country’s top state-owned refiners, are halting Iranian oil purchases for loading in May, three people with knowledge of the matter said.
Venezuela shipments stood at 1.9 million tons, or 462,813 bpd in April, up 85 percent versus 249,700 bpd in March, while crude imports from Iraq were 3.31 million tons, or 806,372 bpd, down from 904,500 bpd the previous month.