Foreign investment in Egyptian debt instruments recorded historical increase: Bloomberg

CAIRO – 2 March 2021: Foreign investment in Egyptian debt instruments recorded a historical increase, rebounding the outflows witnessed in 2020 due to the Corona virus epidemic, according to Bloomberg.

Bloomberg quoted Head of the Debt Management Unit at the Ministry of Finance Mohamed Hegazy, saying that the volume of foreign holdings of treasury bills and bonds in Egypt, located in North Africa, amounted to $ 28.5 billion at the end of February.

It attributed this turnout to the rise in real interest rates in Egypt, which ranks second after Vietnam among more than 50 major economies tracked by Bloomberg, in addition to returns of 1.7 percent since the end of December, compared to an average drop of 2.6 percent across emerging markets, according to Bloomberg Barclays Indicators.

Foreigners have pumped billions of dollars into the Egyptian debt market since the authorities devalued the currency in late 2016, as part of the comprehensive economic program supported by a $ 12 billion loan from the International Monetary Fund, but the flows temporarily rebounded due to the Corona epidemic, which led to an outflow of about $17.5 billion from the country in the spring of 2020.

“Egypt is attracting more interest as it seeks to settle its domestic debt with Euroclear Bank SA in Belgium later this year,” Bloomberg stated, noting that Egypt announced meeting the requirements to include its banknotes in the government bond index in emerging markets affiliated with JPMorgan Chase & Co, which attracts investments from passive funds that follow the scale.

Hegazy said that the percentage of net bond issuances from local offerings rose to 110 percent by the end of February, surpassing the 80 percent target, which the state wanted to reach by June.

"The new debt instruments issued in 2021 may attract more investors and reduce borrowing costs,” he added.