On Wednesday, the Egyptian government priced its $2 billion dual-tranche bond more favorably than initially expected as demand surged, with combined orders exceeding $9.8 billion. The $1.25 billion five-year senior unsecured Reg S bond was priced at a yield of 8.625%, improving on the initial price thoughts (IPTs) of approximately 9.25%. The order book for this tranche surpassed $6 billion, excluding interest from joint lead managers (JLMs).

The $750 million eight-year tranche was priced at a yield of 9.45%, an improvement from the initial price thoughts (IPTs) of around 10%. The order book for this tranche exceeded $3.8 billion, excluding interest from joint lead managers (JLMs). The bonds will be listed on the London Stock Exchange. The offering is being managed by JPMorgan Chase & Co., Citigroup Inc., HSBC Holdings Plc, Goldman Sachs Group Inc., Standard Chartered Plc, and Sumitomo Mitsui Banking Corp.

The bonds are being marketed under Egypt’s Global Medium-Term Note Programme, which the government has previously used for bond issuances, including a $1.5 billion sukuk sale in 2023. Egypt’s capital market has grown increasingly active recently, with the government raising substantial funds through various bond offerings. While the country’s debt instruments attract investors with their higher yields, the economy continues to face challenges from high inflation and foreign currency shortages.

Egypt’s capital market also benefits from its efforts to implement structural reforms, which are part of its ongoing agreement with the International Monetary Fund (IMF).

The Egyptian Exchange (EGX) serves as the primary trading platform for stocks, bonds, and other securities. The government continues to tap local and international debt markets to finance its fiscal deficit. Beyond sovereign bonds, Egypt has been expanding its offerings, including green bonds and other instruments designed to attract international capital.

Meanwhile, Egypt is expected to borrow approximately $40 billion from the local market in the first quarter of 2025 to meet debt obligations and address the state’s budget deficit, according to local media reports. The country’s capital market is likely to play a crucial role in managing this growing debt burden, with analysts predicting that bond issuance will remain a key tool for financing the government’s fiscal needs.