Egypt to Offer $2 Billion in Debt After 3rd Budget Gap Revision

Egypt plans to sell 12 billion Egyptian pounds ($2 billion) in treasury bills and bonds in the next week after revising its budget deficit target for the third time since the fiscal year started July 1.

The North African country will offer 11 billion pounds in three-, six-, nine- and 12-month notes and 1 billion pounds in seven-year bonds, according to the debt-issuance calendar on the Finance Ministry’s website. The yield on one-year securities (EGTBY12) rose at the last 10 auctions to a record 15.399 percent at the last sale on Dec. 29.

Egypt’s local borrowing costs soared and its dollar bonds have slumped as the country’s interim governments failed to set clear economic policies following the ouster of former President Hosni Mubarak almost a year ago. Finance Minister Mumtaz el- Saeed said yesterday the government is sticking to the 8.6 percent budget deficit target it set in June, down from the 10 percent goal announced by the Minister of Planning, Fayza Aboulnaga, on Dec. 15.

Minister of Trade and Industry Mahmoud Eissa told Germany’s Handelsblatt Egypt is considering asking for aid from the International Monetary Fund as “an option,” and will shortly begin a series of “road shows” abroad to attract foreign investment. His comments came after Aboulnaga said this week the government has asked the IMF to postpone “by a few weeks” talks on a $3.2 billion loan originally planned for this week. Egypt had turned down a similar loan package from the agency last June.

The yield on Egypt’s 5.75 percent 10-year dollar bond due April 2020 rose for a fourth day, gaining two basis points, or 0.02 percentage point, to 8.05 percent at 1:02 p.m. in Cairo. The rate was at 8.07 basis points on Dec. 23, the highest since the notes were issued. The pound (EGP) was little changed at 6.0329 a dollar.

The cost of protecting Egyptian government debt against default for five years fell two basis points to 640, according to CMA, which is owned by CME Group Inc. and compiles data from the privately negotiated market.

Egypt’s credit default swaps rate is the highest in the Middle East.

To contact the reporter on this story: Ahmed A Namatalla in Cairo at anamatalla@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

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