Egypt Becomes First MENA Country to Issue Chinese Yuan-Denominated Bonds

Eygpt has reportedly change into the primary Middle East North Africa (MENA) area nation to difficulty so-called “panda bonds” after it issued Chinese yuan denominated bonds price $479 million. Issuing panda bonds marks one other step in Egypt’s makes an attempt to maneuver away from expensive greenback denominated loans.

Egypt’s Worsening Debt Affordability

Egypt, one in every of Africa’s closely indebted international locations, just lately issued Chinese foreign money denominated bonds price an estimated $479 million or 3.5 billion yuan. The three-year bonds, which had been reportedly issued with an rate of interest of three.5%, are a part of the North African nation’s makes an attempt at diversifying the nation’s funding sources.

According to a Business Insider report, the speed of curiosity on these bonds is way decrease than what Egypt would ordinarily pay had been they denominated in {dollars}. Lowering the price of servicing its money owed stays a precedence for Egypt, which just lately had its credit standing standing lowered to Caa1, some seven ranges into junk standing. Egypt’s worsening debt affordability was cited by ranking company Moody’s as one of many the reason why the nation’s credit score standing was lower.

However, Mohamed Maait, Egypt’s finance minister, is quoted within the Business Insider report expressing his nation’s need to rein in on borrowing prices.

“We are working on diversifying our financing sources through different capital markets as well as securing guarantees from several institutions to reduce the cost of the debt during this challenging high interest-rate environment,” Maait reportedly mentioned.

Egypt’s De-Dollarization Drive

The yuan bonds, also called “panda bonds,” are debt devices issued by non-Chinese entities. The bonds can solely be offered in China, whereas issuers are usually not permitted to repatriate such funds. Poland and the Philippines are identified to be the one international locations to have issued such bonds.

By issuing the so-called panda bonds, Egypt has change into the primary nation from the MENA area to take action. The transfer additionally makes good on Egypt’s pledge to de-dollarize its economic system. Meanwhile, along with the panda bonds, Egypt can also be reportedly planning to difficulty Japanese yen denominated bonds or “samurai” bonds.

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