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

Eygpt has reportedly go the archetypal Middle East North Africa (MENA) portion state to contented alleged “panda bonds” aft it issued Chinese yuan denominated bonds worthy $479 million. Issuing panda bonds marks different measurement successful Egypt’s attempts to determination distant from costly dollar denominated loans.

Egypt’s Worsening Debt Affordability

Egypt, 1 of Africa’s heavy indebted countries, precocious issued Chinese currency denominated bonds worthy an estimated $479 cardinal oregon 3.5 cardinal yuan. The three-year bonds, which were reportedly issued with an involvement complaint of 3.5%, are portion of the North African country’s attempts astatine diversifying the country’s backing sources.

According to a Business Insider report, the complaint of involvement connected these bonds is overmuch little than what Egypt would ordinarily wage were they denominated successful dollars. Lowering the outgo of servicing its debts remains a precedence for Egypt, which precocious had its recognition standing presumption lowered to Caa1, immoderate 7 levels into junk status. Egypt’s worsening indebtedness affordability was cited by standing bureau Moody’s arsenic 1 of the reasons wherefore the country’s recognition presumption was cut.

However, Mohamed Maait, Egypt’s concern minister, is quoted successful the Business Insider study expressing his country’s tendency to rein successful connected borrowing costs.

“We are moving connected diversifying our financing sources done antithetic superior markets arsenic good arsenic securing guarantees from respective institutions to trim the outgo of the indebtedness during this challenging precocious interest-rate environment,” Maait reportedly said.

Egypt’s De-Dollarization Drive

The yuan bonds, besides known arsenic “panda bonds,” are indebtedness instruments issued by non-Chinese entities. The bonds tin lone beryllium sold successful China, portion issuers are not permitted to repatriate specified funds. Poland and the Philippines are known to beryllium the lone countries to person issued specified bonds.

By issuing the alleged panda bonds, Egypt has go the archetypal state from the MENA portion to bash so. The determination besides makes bully connected Egypt’s pledge to de-dollarize its economy. Meanwhile, successful summation to the panda bonds, Egypt is besides reportedly readying to contented Japanese yen denominated bonds oregon “samurai” bonds.

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