Egypt's return to JPMorgan bond index could attract $4.8B: Rand Merchant Bank

CAIRO – 29 March 2021: The Rand Merchant Bank (RMB) estimated on Monday that Egypt's anticipated return to the JPMorgan index of emerging market government bonds could attract $ 4.8 billion in new inflows and lift the Egyptian pound by up to 5 percent against the dollar.

Egypt, which was excluded from the index following the 2011 uprising, has been working for more than two years to be re-listed, and Neville Mandemika, an economist at RMB, said the re-listing of Egypt is expected by the second half of this year, according to Reuters.

RMB said that Egypt had performed well in terms of improving its macroeconomic fundamentals after it completed a financing program with the International Monetary Fund in 2019 and achieved steady primary budget surpluses that paved the way for a reduction in the debt-to-GDP ratio.

He added that the total nominal value of Egypt's bonds due in more than two and a half years amounts to $ 28.2 billion, which meets the criteria for joining the index.

This would give Egypt a weight of 2% on the index, and would transfer some of its assets under management by about $ 240 billion.

Mandimika explained that yields tend to decline an average of 130 basis points before listing.