Egypt will sell $4 billion of Eurobonds in three tranches, raising twice as much as targeted when it began a roadshow last week, and at lower yields than initially expected, bankers involved in the deal said on Tuesday.
Bankers said the issue was likely to comprise $1.75 billion of five-year bonds yielding 6.125 percent, $1 billion of 10-year bonds paying a yield of 7.50 percent and $1.25 billion of 30-year bonds yielding 8.50 percent.
Initial marketing had pointed to yields of 6.375-6.625 percent, 7.625-7.875 percent, and 8.625-8.875 percent respectively. The tighter pricing is a vote of confidence from foreign investors the country has sought to lure back following a 2011 uprising that drove them away.
"The yields are much better than expected. The expected yields for the five-year was at 6.5 and now it's at 6.125, so that's great news," one banker said.
The combined order books for the bonds exceeded $13.5 billion incorporating the start of sales on the US market, bankers said, although Egypt is not expected to accept this amount.
"The issuance is successful because it offers relatively attractive yields compared to global returns on the dollar at a time when the macro risks related to the Egyptian economy are diminishing and the turnaround story is about to commence," said Cairo-based CI Capital economist Hany Farahat.
The country of over 90 million has been seeking a variety of funding sources, from development loans to foreign grants and aid, to plug its financing needs as it struggles with an acute dollar shortage that has hampered its ability to import.