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UPDATE 2-Egypt gets $3.75 billion in three-tranche bond sale

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By Yousef Saba and Patrick Werr

CAIRO, Feb 8 (Reuters) - Egypt sold $3.75 billion in bondson Monday to finance a portion of its fiscal deficit, withmaturities of five, 10 and 40 years, a document showed.

The yield was significantly lower than those of other bondsrecently issued by Egypt.

Egypt sold $750 million in five-year bonds at 3.875%, $1.5billion in 10-year bonds at 5.875% and $1.5 billion in 40-yearnotes at 7.5%, a document from one of the banks on the dealshowed. It received around $15 billion in orders.

"It looks like yields have dropped, by quite a bit,actually," said Allen Sandeep of Naeem Brokerage.

A four-year bond issued in May 2020 yielded 5.75% comparedto 3.875% for the current five-year bond. A five-year Green bondissued in September yielded 5.25%.

"It's a big drop. It shows that the risk premium has droppedconsiderably," Sandeep said.

Demand on the latest bonds skewed to the longer-datedtranches, the document showed.

Egypt has been tapping international debt markets as itgrapples with the coronavirus crisis, which caused tourism - akey source of hard currency - to collapse.

The pandemic also led to a sharp fall in foreign directinvestment and weaker domestic economic activity.

Initial price guidance was 4.25% to 4.375% for the five-yeartranche, around 6.25% for the 10-year bonds and around 7.875%for the 40-year notes.

Citi, First Abu Dhabi Bank, Goldman SachsInternational, HSBC, JPMorgan andStandard Chartered are arranging the deal.

Egypt received $2.77 billion in emergency financing fromthe International Monetary Fund (IMF) in May and another $5.2billion Stand-By Arrangement from the IMF in June.

In May, it sold $5 billion in bonds with maturities of four,12 and 30 years and in September sold $750 million in five-yeargreen bonds, the first by a sovereign in the region.

Last month, the IMF raised its growth forecast for Egypt'seconomy in the financial year that will end in June to 2.8%,matching the lower end of the government's own estimate andciting a milder-than-expected contraction during the coronaviruspandemic.(Reporting by Yousef Saba in Dubai and by Patrick Werr inCairo; Editing by Kevin Liffey and Andrea Ricci)