Investors give Egypt the thumbs up

Egypt’s recent economic reforms received a warm welcome from investors earlier this month, as the country successfully issued US$4bn of international bonds. The sale was almost double the amount that the Egyptian authorities had originally targeted and they received total orders of around US$13.5bn for 5-year, 10-year and 30-year tranches. This follows a 50bp narrowing of the spread of Egyptian dollar bonds over US Treasuries over the past few months. Investors appear to be more confident that the devaluation of the pound in November and the country’s IMF deal will reduce external risks. For our part, we think that, with the bond sale under its belt, Egypt should comfortably meet its external financing needs over the next twelve months.