Egypt has launched a five-year, local-currency denominated Eurobond worth E£6bn ($1bn) as part of an ongoing campaign to develop the country’s capital markets.The bond, priced at 99.504 and payable in...

Egypt has launched a five-year, local-currency denominated Eurobond worth E£6bn ($1bn) as part of an ongoing campaign to develop the country’s capital markets.The bond, priced at 99.504 and payable in dollars, offers a yield of 8.875 per cent. Initial guidance was in the range of 8.75-9.0 per cent.  “We are going to the international markets in order to connect them to our own domestic capital markets,” finance minister Dr Youssef Boutros-Ghali said.A 10-year bond is planned by the end of this year, with longer maturities to follow.Dr Boutros-Ghali said the issue had not been affected by the upheavals in the credit market, which have halted some corporate bond issues in recent weeks, although sovereign debt has proved resilient. “Turmoil in the market has not affected the appetite for Egypt. Our offering was 2½ times oversubscribed,” he said. “People are convinced Egypt has a serious story to tell, and that we are operating a serious programme of reform that has already proven its effectiveness.” S&P has assigned a ‘BB+’ long-term senior unsecured debt rating to the bond issue. Egypt is ranked one notch below investment grade by all three major credit ratings agencies, S&P, Moody’s and Fitch.“Investors already see Egypt as investment grade – the ratings agencies will catch up soon enough,” Dr Boutros-Ghali said.Foreign investment and state asset sales have boosted Egypt’s economic growth, helping it to expand at 7 per cent a year.A well-received local-currency sovereign issue will pave the way for Egyptian corporates to issue debt in future, he added.Egypt also intends to begin registering its domestic issues on Euroclear, the international settlements system for bond, equity and fund transactions.Last week, Mohamed Assad, the head of the government’s public debt management division. said the Egyptian pound is expected to be “Euroclearable” by the end of the year.The lead arrangers for the deal were Citigroup and JPMorgan. (source: Financial Times)