Foreigners scoop up Egypt debt
Overseas buyers purchase 98.5% of the 6.6b pounds of six-month T-bills
Foreign investors bought almost all of the Egyptian Treasuries sold on Thursday, adding to recent evidence that confidence in the economy is growing since it floated the pound and secured a $12 billion (Dh44 billion) loan from the International Monetary Fund.
Overseas buyers purchased 98.5 per cent of the 6.6 billion pounds (Dh1.3 billion, $372 million) of six-month T-bills and 97.5 per cent of the same amount of one-year bills, Samy Khallaf, head of the public debt department at the Finance Ministry, said in a phone interview on Friday. The average yield on six-month securities plunged almost 2 percentage points, the most on record, according to data compiled by Bloomberg. Foreign investments bring yields down,” said.
Demand for Egyptian assets has been growing since authorities removed currency controls and raised interest rates in November, part of efforts to secure IMF assistance for its plan to overhaul the economy after years of political upheaval since the public uprising that toppled longtime leader Hosni Mubarak in 2011. Egypt last month tapped overseas debt markets for the first time since 2015, while foreign inflows into domestic stocks have also surged on the lower dollar-based valuations.
The average yield on oneyear securities tumbled 187 basis points, or 1.87 percentage “helped Khallaf point, to 17.725 per cent. Separately, a central bank official told Bloomberg on Thursday the country has managed to clear the backlog of investors seeking to repatriate funds. Foreign investors have often cited difficulties in sending dollars abroad as a reason for avoiding Egypt since 2011.
Greater confidence in the economy was also manifest in the recovery in remittances from Egyptians abroad, which in the fourth quarter grew by 12 per cent from a year earlier to $4.6 billion. A crucial source of hard currency, remittances fell by more than $2 billion to $17 billion last fiscal year, as faith in the pound plummeted and trading on the black market soared.
The pound strengthened by about 3 per cent over the past week, according to National Bank of Egypt data. It has lost about half of its value since the November 3 third flotation, and was trading at 17.725 per dollar at 9:57am yesterday.