Egypt expects its debt to become ‘euroclearable’ in October: finance minister

Egypt expects its debt to become ‘euroclearable’ in October: finance minister
Euro notes in denominations of fives and tens are arranged for a photograph in London, U.K., on Wednesday, Jan. 18, 2012. The euro strengthened and commodities rallied as an official at a Group of 20 nation said the International Monetary Fund is proposing a $1 trillion expansion of its lending resources. U.S. index futures rose before Goldman Sachs Group Inc. reports earnings. Photographer: Simon Dawson/Bloomberg via Getty Images

Egypt has signed an agreement with Euroclear, Europe's biggest settlement house for securities, to allow holders of its sovereign debt to clear transactions outside the country beginning in six months' time, its finance minister said.

Mohamed Maait also told Reuters that Egypt hopes to announce a newsovereign debt issue by the end of September and hopes it will be eligible forclearing via Belgium-based Euroclear.

"Hopefully by October this year, we will be starting to launch thefirst part of our debt, (making it) euroclearable," Maait said in a phoneinterview late on Saturday.

The government is considering issuing "green bonds, samurai, panda,sukuk and infrastructure bonds", he said.

Maait was speaking from Washington, where treasury officials from aroundthe world have gathered for the spring meetings of the World Bank andInternational Monetary Fund.

Euroclear is due to officially announce its memorandum of understanding(MoU) with Egypt on Monday, a source familiar with the matter said.

Euroclearability is seen as one of the last stages of capital marketdevelopment and can sharply lower borrowing costs for emerging marketeconomies, says PwC.

The deal will help "create the right market conditions for localcurrency sovereign debt issuance," according to a draft Euroclear pressrelease, seen by Reuters and due to be published on Monday.

"The intention is for the market to eventually becomeEuroclearable, creating a cross-border link to enable international investmentin Egyptian domestic debt instruments," the release said.

Settling debt via Euroclear requires high levels of transparency as wellas specifics on the size and structure of the debt to be issued, among otheraspects under Euroclear rules.

In February Egypt sold $4 billion in dollar-denominated eurobonds andthis month it issued 2 billion euros ($2.3 billion) in euro-denominated bonds.

Maait also said in the interview that Egypt plans to sell stakes in atleast another five or six state-owned enterprises (SOEs) by the end of June2020.

It plans to use the proceeds from stake sales to help boost publicfinances as part of a three-year economic reform programme agreed with the IMFin late 2016. Egypt received a $12 billion loan from the IMF.

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