Egypt to tap the market with Eurobonds

The Wires: Egypt plans $1 billion Eurobond sale this year, says finance minister.

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Egypt plans to sell $1 billion (Dh3.67bn) in five-year Eurobonds this year to diversify borrowing and finance a widening budget deficit after its economy was rocked by the worst political crisis in 30 years.

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The bonds will be backed by a US "sovereign guarantee" as part of a US aid package, Finance Minister Samir Radwan. "We should tap the market quickly," he said. "We need to diversify because the local market is squeezed."

Egypt's budget deficit may widen to 11 per cent of gross domestic product in the fiscal year that ends June 2012, from a forecast 9.2 per cent this fiscal year, Radwan said in remarks posted on the ministry's website on May 19.

A popular uprising forced President Hosni Mubarak to step down in February. The turmoil that accompanied the popular revolt forced tourists to flee, weakened the pound and raised government borrowing costs.

The Cairo-based Ministry of Finance hasn't yet hired banks to manage the sale, Radwan said.

Alaa Shahine - Bloomberg News