Egypt issues second batch of Yen-denominated Samurai bonds at $500 bln

Doaa A.Moneim , Thursday 2 Nov 2023

Egypt issued its second batch of Yen-denominated Samurai bonds with a value of ¥75 billion (about $500 million) in a five-year tenor and with a regular dividend of 1.5 percent, Minister of Finance Mohamed Maait said in a statement on Thursday.

Depiction of Samurai bonds. Stockphoto.


Maait said that these bonds with such tenor help prolong the country’s public debt maturity, lower the cost of the external debt, diversify both financing resources and currencies, and attract new global investors.

The action comes a day before the anticipated decision the major credit rating agency Fitch Ratings will announce in terms of downgrading Egypt’s long-term sovereign credit rating against the backdrop of the severe shortage of the US dollar liquidity in the Egyptian market.

The Egyptian cabinet approved issuing the second batch of $500 million Yen-denominated bonds in August. It also green-lighted the third batch with the same value in October. The first batch was issued in April at the same value.

Egypt issued its first sustainable Panda bonds, one of a kind in the Middle East and North Africa, worth ¥3.5 billion ($500 million) with a yield of 3.5 percent over three years.

Such issuance helps finance the budget deficit, which accounts for six percent of its GDP in FY2022/2023.

Minister Maait said in September that the government seeks to collect $1.5 billion in external financing before the end of 2023 as a bid to deal with the marked US dollar shortage.

Recently, credit rating agencies Moody’s and S&P Global have revised Egypt’s long-term credit rating, but with a stable outlook.

Moody’s downgraded Egypt’s credit rating from B3 to Caa1, changing the outlook from negative to stable, attributing its decision to the foreign currency shortage crunch in the face of increasing external debt service payments over the next two years.

S&P Global downgraded Egypt's long-term sovereign credit rating in local and foreign currencies from B to B- and labelled the outlook as stable, noting the country's ongoing hard currency shortage.

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