World Bank: Jordan renewed Eurobonds for 1bln dollars in 2022

[22-01-2023 10:13 AM]

Ammon News -

The World Bank said that multilateral loans dominated Jordan's net external borrowing, while "the stock of Eurobonds remained unchanged."

The bank added, in the Jordan Economic Monitor report, that most of Jordan's multilateral borrowings during the first 8 months of 2022 were from the International Monetary Fund (IMF) and the World Bank.

The report indicated that Jordan only partially renewed Eurobonds amounting to one billion US dollars, which matured in June 2022, as international bonds worth $650 million were issued during the same month, at a rate of 7.75%, for a maturity of 5.5 years.

The Eurobond is a bond issued by a borrower in a foreign country, denominated in European currencies (for example, the US dollar, the Canadian dollar, the yen, the euro, etc.), which is subscribed and sold by an international syndicate of financial institutions, according to the UN.

The bank stated that "the subscription to these bonds was strong, exceeding the offer by more than three times, which reflects the confidence of investors in Jordan and its continued access to foreign financial markets."

To finance the remaining part, the report indicated that the government issued domestic bonds denominated in US dollars in July 2022, after paying off Eurobonds in the previous June.

The report added that public debt service rose to 7.9% of GDP during the first eight months, compared to 6.6% during the same period of the previous year.

The international rating agencies Fitch and Standard & Poor's affirmed Jordan's sovereign credit rating in foreign currencies with a stable outlook last year, while Moody's raised Jordan's credit outlook from B1 "stable" to "positive”.

Local borrowing

The report indicated that “domestic borrowing and short-term issuances dominated the concluded debt during the first half of 2022, and unlike previous years, the government mainly issued short-term treasury bills, while the repayment of treasury bills (especially those with longer maturities) outpaced new issues.

The report stressed that Jordan's continued economic recovery has a positive impact on public debt developments despite the high budget deficit, explaining that at the end of August 2022, the total government debt and government-guaranteed debt amounted to approximately JD37.8 billion, which is the highest by 1.3 billion dinars from its position at the end of 2021.

“The recent revision of GDP figures led to a decrease in the ratio of public debt to GDP in 2021 by 1.2%, to reach 112.2% of GDP,” according to the report, which indicated that the public debt after excluding the debts of an investment fund Social security funds amounted to 30.3 billion dinars in August 2022.

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