Thursday, 31 July 2014

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Tunisia seeks U.S. guarantee for bonds

Tunisia will seek a U.S. guarantee for its bonds for the second consecutive year and will sell Islamic debt in June as the North African nation mobilizes funds to shield the economy from Europe’s crisis and domestic turmoil.

The government may sell $500 million of U.S.-backed notes in the second half, Finance Minister Elyes Fakhfakh said in an interview with Bloomberg.

The yield on $485 million of similarly-guaranteed debt due July 2019 fell 21 basis points this year to 1.48 percent yesterday, compared with 5.34 percent on Tunisia’s euro- denominated notes due June 2020. The average yield on Middle Eastern sovereign debt was little changed last week at 4.37 percent.

We will ask for another U.S. Treasury backing,” Fakhfakh also said. “We are still in this transition process. There are still some risks.”

Tunisia’s financing plans also include $400 million in so- called Samurai bonds and 1 billion dinars ($626 million) in Sukuk, Fakhfakh added. Ministry and central bank officials will meet April 11 to discuss details of the Sukuk sale, he said.

The Sukuk sale will help “diversify our debt,” the minister said. “We used to have a conflicting relation with religion, even Islamic finance, under the dictatorship,” he said. “Now we are more open.”


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