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Bond Market News
Egypt’s Dollar Bonds Trade Lower by 3-4% on Drop in Foreign Assets
August 3, 2023
Egypt’s dollar bonds moved 3-4% lower after net foreign assets held in its commercial banks reached a record deficit of $17.1bn in June (from a $14.5bn deficit in May). This decrease was driven by a lack of inflows and its efforts to stabilize its domestic currency. The country has been grappling with the worst foreign-currency shortage it had experienced in years as it continues to draw on its reserves to stabilize its local currency that was adversely hit by the Russia-Ukraine war. Egyptian authorities are currently trying to boost their liquidity as they are facing pressures to sell-off local currency holdings to clear a backlog of foreign-currency requests from importers and other companies, fueling further depreciation pressures. The currency is already down 20% YTD. Egypt is still waiting for a review of a programme they have with the IMF. The multilateral lender has said earlier, that they will only review the programme once Egypt enacts more of the wide-ranging reforms it had pledged.
Egypt’s 7.5% 2027s have fallen 5% since the start of the week and are currently trading at 75.7 cents on the dollar, yielding 17%.
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