Citigroup says Persian Gulf aid for Egypt may wane on Oil

Egypt may be at risk of losing support from Persian Gulf nations that have poured more than $15 billion into the economy as oil prices sink, according to Citigroup Inc.

This could complicate plans by the government to issue as much as $1.5 billion of bonds next year, said Farouk Soussa, chief Middle East economist at Citigroup Global Markets Ltd. While Egyptian Finance Minister Hany Kadry Dimian said this month that a foreign guarantee for the sale was unnecessary, he spoke as recently as September about efforts to secure the backing of a AAA rated sovereign to lower borrowing costs.

“The Gulf may reassess its support for Egypt in light of falling oil prices,” London-based Soussa said yesterday by phone. “Egypt will be facing headwinds the longer it waits to issue bonds if investors begin to perceive a threat to that support.”