Jordan said on Tuesday it issued a double tranche of $1.75 billion of Eurobonds that will help it cope with the economic impact of COVID-19, which economists and critics say will push public debt to a record 100% of gross domestic product.
The Finance Ministry said the issue of $500 million at 4.95% over a five-year maturity and $1.25 billion at 5.85% over a 10-year maturity was oversubscribed by more than 6.25 times after attracting bids worth over $6.25 billion.
Finance Minister Mohammad Al Ississ said the oversubscription and "relatively low interest rate" of Jordan's Eurobonds was a "testament to its fiscal stability."
The high demand led to lowering the yield on the recently offered Eurobonds, lessening the interest burden, the Finance Ministry said. The rates were significantly lower than Jordan’s last Eurobond issuance of 2017 and recent issues by peer countries of similar ratings, it said.
Al Ississ said the funds would go towards covering a Eurobond maturing in October, worth $1.25 billion and injecting liquidity into the private sector by paying arrears accumulated by both present and previous governments.
Those owed include hospitals, pharmaceuticals, energy and contractors, he said.
Under a new four-year $1.3 billion IMF deal last March, the kingdom has to proceed with structural reforms and fiscal consolidation to reduce a $42 billion public debt, that now stands above 100% of gross domestic product and has spiraled in the last decade due to employment in a bloated public sector.
Jordan's 2020 growth was also expected to plunge by 3.4% this year as a result of COVID-19 compared to the International Monetary Fund’s 2.1% forecast before the crisis.
Economists said fiscal stability was at stake if the government does not rein in public spending that has expanded rapidly as successive governments sought to appease citizens with state jobs to maintain stability.
