CAIRO: The Egyptian government s New Urban Communities Authority has priced LE 2.5 billion ($457 million) in bonds it is offering at a floating rate of 62.5 basis points above 182-day Treasury bills. The offering will be the first since Egypt changed its laws in December to allow utilities and other quasi-government organizations to issue bonds directly, a move designed to expand the country s debt market. The five-year bonds, guaranteed by the Finance Ministry, will be offered to the public in a subscription beginning in 15 days and continuing for two months, or until fully covered, an advertisement in Al-Alam Al-Yom newspaper said on Sunday. The authority will issue another LE 2.5 billion in 13-month bonds in a private placement, the advertisement added. The authority, which is responsible for developing satellite cities mainly around Cairo, will use the proceeds from the two bond issues to finance infrastructure projects. The coupon on the five-year bonds will be paid on Dec. 30 and June 30 each year, starting in December. The yield will be based on the average yield, after taxes are deducted, of the most recent 182-day Treasury bill before the coupon is due. The most recent 182-day Treasury bill, on March 7, had an average yield of 7.9736 percent, while the most recent five-year Treasury bond had a yield of 9.1 percent. Each five-year bond will have a face value of LE 1,000 and be registered on the Egyptian stock exchange. The lead managers are HSBC, Commercial International Bank. The United Bank, owned 99 percent owned by the Central Bank of Egypt, is assistant manager. Egypt said last week it also planned to tap the Eurobond market for $1 billion-1.5 billion within weeks, its first such issue since 2007. By allowing state utilities to issue bonds, the government hopes it will be easier for it to finance infrastructure and other projects. In May, the authority securitized 4.65 billion pounds of installments for land it had sold, with the notes maturing in 2017. As quasi-government bodies were not allowed to issue bonds at the time, the authority was forced to raise the funds through a special vehicle established for that purpose.
