Egypt Temporarily Postpones Plan to Issue International Bonds Amid Fallout from the War on Iran

SadaNews - The Egyptian government has postponed its plan to issue international bonds during the current period due to the escalating geopolitical tensions related to the U.S.-Israeli war on Iran, according to statements from a government official.

Finance Minister Ahmed Kojok revealed at the beginning of last month that the government intended to issue international bonds worth approximately two billion dollars during the first six months of 2026, which represents half of the targeted issuances for the country in the current fiscal year.

The fiscal year in Egypt begins in July and ends at the end of June. The Egyptian government usually issues international debt instruments during the first two months of the calendar year.

Uncertainty in Financial Markets

The postponement comes as a result of the uncertainty that dominates global financial markets and the rising cost of insuring sovereign debt, making the current timing unsuitable for international borrowing, despite the state having recently succeeded in meeting its obligations from sovereign debt instruments regularly, according to the official who requested anonymity.

He clarified that the step aims to avoid burdening the public budget with high-interest burdens that may arise from the risks associated with the Iranian war, as the Ministry of Finance preferred to rely on local financing alternatives or temporarily activate its own resources until geopolitical situations stabilize.

The war launched by the United States and Israel against Iran at the end of last month has expanded to the region, shaking global energy markets after navigation was disrupted in the Strait of Hormuz and some oil production in the Gulf ceased. This raised concerns about inflation and led the markets to expect an increase in interest rates.

When Will the Issuance Occur?

The official stated that if the conditions in international markets improve with the calming of tensions in the region, the government will consider issuing bonds before the end of the current fiscal year.

This comes at a time when Egypt's budget deficit has worsened during the first half of the current fiscal year to 4.2% of the GDP, pressured by rising expenditure burdens and interest on debts that consumed about 92% of total revenue, presenting the largest burden on the Egyptian economy.

The official added that this move maintains the targeted deficit levels and prevents the depletion of dollar liquidity in paying high interest.

Egypt had issued its first dollar bonds in four years at the beginning of 2025, raising two billion dollars through two tranches for six and eight years, amid strong demand, with coverage reaching about five times the size of the issuance. The strength of demand contributed to reducing the final yield by 60 basis points from the indicative price, according to Bloomberg data.

In October, the government issued international sukuk valued at 1.5 billion dollars distributed over two tranches as well, and investor requests exceeded nine billion dollars, allowing the government to reduce the issuance premium on the two tranches represented in maturities of three and a half years and seven years.