(Adds analyst comment)
CAIRO, April 19 Egypt is to increase the maximum
amount of dollar bonds it can issue on international markets to
$7 billion, a cabinet statement said.
The present $5 billion cap will be raised by up to $2
billion, the statement said.
It said the Ministry of Finance was seeking to obtain
additional financing in the face of a rise in interest rates on
the domestic market and to increase U.S. dollar reserves held by
the central bank.
"The government's current trend is to replace domestic
borrowing by external borrowing in order to reduce the cost of
borrowing as local interest rates rise," Reham El Desoki of
Arqaam Capital told Reuters.
"The government's decision today to raise the ceiling on the
issue of international bonds comes amid expectations of the
issuance of bonds worth $3 billion at the end of this year."
In February, Egypt's central bank raised $4 billion from a
Eurobond sale, twice as much as it initially targeted and at
lower yields than expected.
Egypt 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.
The country's dramatic decision to float its currency in
November -- roughly halving its value overnight -- along with a
three-year $12 billion IMF programme attached to sweeping
reforms have been widely praised by economists and investors.
(Reporting by Ali Abdelatti; Writing by Giles Elgood; Editing
by Alison Williams and Hugh Lawson)