Egypt Prepares to Return to International Debt Market with $3 Billion Eurobond Issue
Egypt is set to return to the international debt market for the first time since 2021, with a planned issuance of around $3 billion in eurobonds. The upcoming issue may include multiple tranches of external debt, potentially including sukuk.
The Egyptian risk is currently very high. Rated "Caa1" with a positive outlook by Moody's and "B-" with a positive outlook by S&P, the planned operation is highly risky. Egyptian dollar-denominated eurobonds maturing in 2047 were trading at over 80 cents to the dollar. The country's dollar-denominated debt has been the fourth-best performer among its peers this year, with a total return of over 30%, more than three times the average of emerging markets.
After a $35 billion tourism development agreement with the United Arab Emirates and an $8 billion agreement with the IMF, the country has been able to resolve a severe short-term dollar liquidity crisis and meet its external debt payment schedule.
The support Egypt receives from its Gulf neighbors would be highly beneficial, despite being surrounded by conflicts: Sudan to the south, Libya to the west, and Gaza to the east. For Tunisia, this is a very good proxy to gauge the interest rate that will be retained from this operation. We are rated "Caa2" by Moody's, and the price Egypt will pay is the minimum threshold for us in the best-case scenario. The market's assessment of our risk would be useful. In any case, the rate is in double digits.
