April 21 (Bloomberg) -- Egypt plans to raise $1.5 billion of bonds after adding a 30-year note to its first overseas sale of dollar debt in nine years, according to a banker involved in the transactio...

April 21 (Bloomberg) -- Egypt plans to raise $1.5 billion of bonds after adding a 30-year note to its first overseas sale of dollar debt in nine years, according to a banker involved in the transaction. The country may sell $1 billion of 10-year notes to yield about 5.875 percent and $500 million of 30-year bonds to yield about 7 percent, said the banker, who declined to be identified because terms aren’t set. Egypt’s decision to boost the size of the offering “is a positive indicator that means that foreign investors are confident about the economy,” Reham El-Desoki, senior economist at Cairo-based investment bank Beltone Financial, said in a telephone interview. “Another indicator to watch is how much the offering will be covered.” The government is tapping international debt markets to help finance its budget deficit. It plans to reduce the shortfall to 7.9 percent of gross domestic product in the next fiscal year starting July, from a projected 8.4 percent this year, Finance Minister Youssef Boutros-Ghali said March 4. Egypt’s economy expanded 4.7 percent in the fiscal year that ended in June, beating the forecasts of the International Monetary Fund. The government expects the economy to grow more than 5 percent this fiscal year. Mubarak Egypt, a close U.S. ally, will hold its presidential election by 2011. President Hosni Mubarak, who will turn 82 next month and has ruled the country since 1981, underwent a gallbladder surgery in Germany last month and speculation about his health has fueled a debate about who will succeed him at the helm of the most populous Arab country. Opposition groups such as the Muslim Brotherhood have said the president is grooming his son Gamal, a former investment banker, to become president. Both father and son have denied the speculation. HSBC Holdings Plc and Morgan Stanley are managing the debt offering, the banker said. Mohamed Assaad, public debt adviser to Egypt’s finance minister, declined to comment on the sale. Egypt sold $1.5 billion of bonds in June 2001, according to data compiled by Bloomberg. Egypt’s debt is rated Ba1 by Moody’s Investors Service and BB+ by Standard & Poor’s and Fitch Ratings. The rankings are one level below investment grade. Emerging-market bond funds received $1.8 billion in the week to April 14, lifting 2010 inflows to a record, as higher- yielding debt attracted global investors, EPFR Global said April 16. The extra yield investors demand to own developing nation bonds instead of Treasuries has narrowed 34 basis points this year to 2.40 percentage points, according to JPMorgan Chase & Co.’s EMBI+ Index. A basis point equals 0.01 percentage point. (Source:Bloomberg)