Egypt continues to convert deposits received from Qatar into fixed-term notes, after the sovereign privately placed a $1 billion bond in early July, its second such deal in just over a month.
The new US$1 billion three-year bond was issued on July 1 at par to yield 3.5 per cent via HSBC and QNB Capital. It follows a $2.7bn, 18-month senior unsecured deal which priced at a yield of 4.25 per cent in late May, part of a $5.5bn lifeline from Qatar that is expected to be converted into securities.
Both were issued from a $12bn EMTN programme set up earlier this year.
The latest transaction was completed just days before the removal of Mohammed Morsi as president.
"(The deal) was planned before any of the demonstrations," said a source familiar with the transaction. "Thankfully it closed before those events."
The source said the Caa1/CCC+/B- rated country's plan to sell more bonds under the programme remains in place, despite a change in leadership in both Egypt and Qatar.
"There was a plan to issue more," the source said. "But obviously there are new complications now and there has been a change in the Qatari leadership as well. There will definitely be a period of uncertainty."
If other deals are to go ahead, Egypt would need to issue a supplementary prospectus highlighting the new risk factors in the wake of Mr Morsi's removal, he said.
"Our assumption is that the new emir in Qatar will continue to support Egypt," said Paul Gamble, head of Mena sovereigns at Fitch.
"What we could also see now is more from Saudi Arabia and the UAE in terms of monetary support (for Egypt), particularly the UAE. It is significant that the Egyptian central bank governor went to the UAE this week," he said.
Egypt needs the inflows to keep afloat. The Qatari funds alone are not sufficient to alleviate the shortage of foreign exchange in the economy, he said.
The country's foreign reserves hit a low of $13.4bn in March, less than needed to cover three months of imports. Deposits and loans from Qatar and Libya have helped the country prop up its foreign exchange stockpile, which rose to $16.1bn in May before sliding $1.12bn to $14.9bn in June, according to official figures.
* Reuters
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Conflict, drought, famine
Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.
Band Aid
Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.
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