Egypt, struggling to raise funds at local government debt auctions, is turning to international markets for the first time since a popular revolt in February ended the three-decade rule of President Hosni Mubarak.
Egypt’s 10-year dollar bonds, sold in April 2010 at a yield of 5.75 percent, fell, pushing up the rate 2 basis points to 5.94 percent. The yield climbed five basis points yesterday after Finance Minister Samir Radwan said he plans to “quickly” raise $1 billion through foreign notes backed by a U.S. “sovereign guarantee.” He cited the need to diversify financing sources as the government sold 51 percent of the amount offered at a local auction and the average yield on 252- day bills rose to 12.869 percent, the highest since November 2008.
The government will probably pay more to borrow overseas than in 2010, said Win Thin, the head of emerging-market strategy at Brown Brothers Harriman & Co. The budget deficit may grow to the widest in more than a decade in 2012 after Mubarak’s fall led tourists to flee and agencies to cut the country’s credit ratings, according to the Ministry of Finance.
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