KEY THEMES
As we mentioned in our Trading Playbook last Thursday, Egypt went to the international bond market raising as much as USD3bn in Eurobonds that same day. We had said that Egypt will likely be more active this year and early 2022 in tapping international markets to meet its growing financing needs, including international bonds market, sukuk market, and green bonds.
This recent USD3bn Eurobond issuance was c.3x oversubscribed, compared to c.4x in the preceding issuance. However, Thursday’s Eurobond issuance was accomplished at a slightly lower yield in comparison. We note that the Egyptian government has planned to tap the international market to ask for more than USD4bn, which hints that this issuance will not be the last one in 2021/22. Also, it’s highly expected that the next issuance will be early next year, given the timeline of the government's financing needs.
Overall, the issuance success should support the view that Egypt is in a league of its own, as opposed to the vulnerable segments in the emerging markets (EM) world. This strategy is well timed ahead of potential tightening by the U.S. Federal Reserve and its imminent tapering and the impact on capital flows globally.