Egypt signs deal with Euroclear to expand domestic debt to investors

CAIRO, October 19 (Reuters) – Egypt has signed an agreement with Euroclear, Europe’s largest securities settlement house, to create a cross-border link with the Brussels-based institution, the ministry said on Saturday. Egyptian Finance.

The agreement, signed at the Egyptian Embassy in Washington, DC, will link the Egyptian government’s local currency debt issuance tools to Euroclear through a central securities depository to be established in Egypt by its government.

This will make Egyptian domestic debt accessible to a greater number of foreign investors, and is a step towards finally making Egyptian debt “Euroclearable”, Euroclear said in a statement.

In April, Egypt signed a memorandum of understanding with Euroclear to create the right market conditions for the issuance of sovereign debt in local currency. Finance Minister Mohamed Maait told Reuters last month he expected Egypt’s debt to become “Euroclearable” in early 2020.

“This agreement will allow the market to maintain a large volume of liquidity and will lower the cost of borrowing, subsequently reducing debt yields and increasing the liquidity of local assets,” Maait said, according to the ministry statement. .

Debt settlement through Euroclear requires high levels of transparency as well as details of the size and structure of debt to be issued, among other criteria under Euroclear rules.

In September, Maait said Egypt intended to issue international bonds worth $ 3-7 billion in fiscal year 2019-20.

Stephan Pouyat, global head of capital markets and fund services at Euroclear, said the deal would help Egypt achieve its goal of reaching a broader international institutional investor base and lead to “a market of more robust capital “.

Egypt has borrowed heavily from abroad since a three-year, $ 12 billion program was agreed with the IMF in late 2016. Analysts say it faces a difficult repayment schedule. (Reporting by Yousef Saba and Ehab Farouk; Writing by Mahmoud Mourad and Yousef Saba Editing by Ros Russell)

Carol M. Barragan

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