Egypt remains ‘favorite’ for portfolio investors: Bloomberg

CAIRO - 24 December 2019: Egypt remains a favorite among portfolio investors, Bloomberg stated in a report tackling 10 African markets to be watched in 2020.

“Carry traders, attracted by yields of around 14 percent on pound bonds, have flocked to the Arab nation. The currency has rallied 12 percent this year, its best performance in at least 25 years,” the report read.

According to Bloomberg, Societe Generale SA forecasts that the currency will gain another 4.5 percent to 15.35 per dollar in 2020.

“But the reforms of President Abdel-Fatah al-Sisi are yet to translate into the foreign direct investment and jobs that Egypt badly needs. Aware of that, investors will watch to see if there’s any repeat of the anti-government protests in September that briefly rocked local markets,” the report referred.

Moreover, the report added that local bonds have also performed strongly, referring to the Egyptian pound and Nigerian naira bonds that returned more than 30 percent in dollar terms each.

In November, Egypt returned to the international bond market through auctioning $2 billion in bonds in three tranches. The offering included $500 million 4-year bonds with a 4.55 percent yield, $1 billion of 12-year bonds with a 7.05 percent yield, and $500 million 40-year bonds with a 8.15 percent yield.

"The 40-year bond is considered to be the longest international bond in the Middle East and North Africa, which is a new success for the Finance Ministry policies that aim to extend the life of the public debt portfolio and reduce the cost of debt service," Finance Minister Mohamed Ma'it said.

"Subscription orders exceeded $14.5 billion within few hours of the issuance announcement, which oversubscribed the value of the offer by seven times," the ministry stated.