Egypt aims to tap debt markets for up to $7bn in new financial year

Egypt aims to conclude a non-financial agreement with the International Monetary Fund by October to replace a three-year loan deal that expires this month. (File/AFP)
Updated 26 June 2019

Egypt aims to tap debt markets for up to $7bn in new financial year

  • Officials are considering different programs under IMF
  • Egypt may sell up to $7 billion in int’l bonds in 2019-2020

LONDON: Egypt will tap debt markets for between $4 billion and $7 billion in the coming financial year starting in July and is in talks with the IMF about a non-financial deal to help entice investors, its finance minister said on Tuesday.
The country was considering all options for debt instruments, including sukuk, green bonds and Asian currency bonds, Finance Minister Mohamed Maait told Reuters on the sidelines of an investment conference at Bloomberg in London.
“This time last year I said we would go for between $4 to $7 billion and eventually we went for $6.2 billion,” he said. “Let me repeat what I said last year: between $4-7 billion (for this coming financial year). It depends on market conditions, demand and whether we can diversify to other instruments as we are hoping for green bonds, sukuk.”
The Egyptian parliament on Monday approved the government’s budget for the coming 2019/2020 financial year, targeting a 7.2 percent deficit for the year and 6 percent GDP growth.
Now that the budget was approved, Egypt will start talks with banks in the first quarter from July to September about a potential bond issue, Maait said, adding that the period from November to February was the normal time for any issuance.
Depending on financial conditions, the country could also consider tapping finance from other sources, including the World Bank, African Development Bank, European Bank for Reconstruction and Development and European governments such as France and Germany, he added.
“In the Middle East, development partners find Egypt as somewhere to go for as other places have problems. Egypt needs funding for infrastructure and the development partners have the money,” Maait said.
Egypt signed a three-year, $12 billion loan program with the IMF in late 2016, seeking to attract back international investors who pulled out after an uprising in 2011.
Maait said the government was in talks with the IMF about a new non-financial program that could last around two years with a plan to reach a deal by October. “It would give comfort to international investors and international institutions.”

Saudi Arabia PIF’s $40bn boost aimed at post-pandemic profit

Updated 8 min 42 sec ago

Saudi Arabia PIF’s $40bn boost aimed at post-pandemic profit

  • Since the COVID-19 crisis began, the PIF has spent $7.7 billion amassing a portfolio

DUBAI: The Public Investment Fund (PIF), Saudi Arabia’s ambitious sovereign wealth fund, is seeking to use the extra $40 billion it was recently granted from government reserves to benefit the Kingdom and its citizens when the current coronavirus disease (COVID-19) pandemic is over.

A spokesperson for the PIF said that the injection from reserves held by the Saudi Arabian Monetary Authority — announced last week — “allow us to tap into a number of local and global investment opportunities at attractive prices. This includes investments in sectors that are well positioned to drive economic growth and value creation and derive benefits for the citizens of our country well beyond the current crisis.”

Since the COVID-19 crisis began, the PIF has spent $7.7 billion amassing a portfolio of shake stakes in some of the best-known corporate brand names in the world, including Boeing, Disney, Facebook and Marriott International. It also took big holdings in independent oil companies Shell, Total and BP, as well as banking giants like Citigroup and Bank of America.

The shares of these and other investments in the PIF spending spree had been affected by the dramatic downturn in the US stock market after the first pandemic related lockdowns. They have since recovered almost to all-time highs as US authorities took emergency measures to support its financial institutions.

Some investors are calculating that there will be a rapid economic recovery when the lockdowns end, to send stock markets soaring again.

“The PIF’s role is to invest the nation’s wealth in a way that generates long-term attractive returns and a diversified source of wealth for the Saudi people. The uncertainty caused by COVID-19, and the subsequent drop in global oil prices, highlights why our economic diversification efforts are so important. Capital injections from the government are an established source of funding for the PIF, as outlined in our strategy as part of our Vision Realization Program,” the PIF spokesman said.

The fresh resources for the fund, which has $320 billion of assets under management, will provide extra firepower to take advantage of perceived bargains. Yasir Al-Rumayyan, governor of the PIF, said last month: “You don’t want to waste a crisis. We’re looking into any opportunities.”