Egypt considers return to bond markets
Egypt is considering a U-turn to international bond markets a few days after Morocco capitalized on cheap borrowing costs to reopen old bonds and raise $750 million. Its return will be the first time since the end of the revolution, after the new law allowing the country to issue Islamic-compliant bonds for the first time.
Egypt has released a prospectus for its sukuk bonds capable of raising $12 billion in what would be its first international debt-raising venture since 2010. These sukuks bonds could be issued by early next year. Due to the state of Egypt’s currency and its tensed political arena, investors are reluctant to step into its economy, which is being saved by funds from countries like Libya, Qatar and turkey while the $4,8billion IMF loan lingers. Souheir Asba, frontier market strategist at the Société Générale said it is “just a tourniquet, but it doesn’t stop the bleeding” of the egytian economy.
The government is accused of being very optimistic with the amount it can raise from its sukuks by analysts, especially when the struggles it has gone through to place the full amounts of recent issues in the local currency government bond market is taken into consideration. Daniel Broby, chief investment officer at Silk Invest, said they are sure that Egypt’s situation will be remedied. Egypt’s stock market has seen a bit of a turnaround recently, with the EGX 30 index gaining nearly 10% since it hit a 2013 low on April 3. Postponed parliamentary elections will likely be held in October.
Some investors prefer to remain on the sidelines and wait for the events to unfold in order to get a clear stable outlook before they enter the Egyptian market.