African Finance Corporation Supports Egypt to Expand International Bonds issuance

The African Finance Corporation (AFC) intends to support Egypt in issuing “large” international bonds, whether by strengthening its credit position or by investing in bonds, according to Sanjeev Gupta, Director for financial services at the institution.

Gupta indicated in an interview with Bloomberg that the institution is holding talks with the Egyptian government regarding financing sources, especially since it “has great needs,” 

He noted that the institution is considering how to support Egypt, specifically supporting the Central Bank’s requirements for foreign currency balances, given the presence of swap programs implemented with African central banks, stressing that this is an area in which the foundation can provide support to Egypt.

Gupta spoke about the Samurai bonds that Egypt issued last October and November, amounting to $500 million, amid a foreign currency scarcity crisis that the country is suffering from.

He pointed out that these bonds were a good example of how the institution helped the Egyptian authorities, as it advised the Ministry of Finance to choose a Japanese bond to raise financing instead of resorting to issues such as the traditional Eurobond, given that interest rates in Japan were low.

The financial crisis facing the authorities seemed to have reached a turning point last week, when the authorities signed a huge deal with the UAE to develop “Ras El Hekma”, a distinctive area overlooking Egypt’s Mediterranean coast. The government described it as the largest investment in the country's history, enabling it to obtain FDI worth $35 billion.

This agreement stimulated optimism that the country, which is suffering from financial distress and dollar crisis. Egyptian dollar-denominated bonds also rose during this week’s transactions, and the value of the pound rose in parallel market transactions.

Gupta pointed out that there are promising investment opportunities in Egypt, especially in the technology sectors in general and financial technology in particular, in addition to the industrial sector, stressing that the institution is looking into some potential investments in these sectors.

He added that the African Finance Corporation will continue to focus on the renewable energy sector in Egypt, and "we believe that there is room for investment in infrastructure, especially with the authorities pumping a lot of money into this sector."

The foundation believes that there are “opportunities for a PLO programs and the privatization of some state-owned institutions in Egypt, including basic sectors, and we see this as a great opportunity,” adding: “I cannot go into details, because they are very sensitive, but if everything takes place ... "If anything, you will see some interesting investments."