{"id":44534,"date":"2023-01-20T09:45:29","date_gmt":"2023-01-20T09:45:29","guid":{"rendered":"http:\/\/www.brandon.ddtest.info\/multisite-test\/egypts-local-debt-beckons-with-record-yields-compared-to-peers\/"},"modified":"2023-01-20T09:45:29","modified_gmt":"2023-01-20T09:45:29","slug":"egypts-local-debt-beckons-with-record-yields-compared-to-peers","status":"publish","type":"post","link":"http:\/\/www.brandon.ddtest.info\/multisite-test\/egypts-local-debt-beckons-with-record-yields-compared-to-peers\/","title":{"rendered":"Egypt\u2019s Local Debt Beckons With Record Yields Compared to Peers"},"content":{"rendered":"<p> \n<\/p>\n<div>\n<p>(Bloomberg) &#8212;<\/p>\n<p>Most Read from Bloomberg<\/p>\n<p>Emerging-market investors are preparing to creep back into Egypt\u2019s local debt market, enticed by a cheaper pound and record yields when compared with peers.<\/p>\n<p>Egypt\u2019s move to a more flexible exchange rate has revived interest in its local-currency debt, the worst performer in emerging markets last year, according to Bloomberg indexes. That\u2019s after investors pulled $22 billion from the market over some six months in 2022, according to Finance Minister Mohamed Maait.<\/p>\n<p>Now, almost all of the nation\u2019s Treasury bills are at their widest discount ever relative to emerging-market debt, with yields over other developing countries widening to the most on record this week. Attracting foreign investors back to the local debt market is critical for the Arab world\u2019s most populous country, which has been shut out from external capital markets for nearly a year.<\/p>\n<p>\u201cAfter holding an underweight position for much of 2022, I finally see the conditions for re-entering the local market,\u201d said Gordon Bowers, a London-based analyst at Columbia Threadneedle Investments in London. \u201cI would keep some dry powder available to build an overweight if the currency further overshoots fair value.\u201d<\/p>\n<p>Pound Overshoot<\/p>\n<p>The pound plunged to a record low of 32.1 per dollar this month amid the country\u2019s worst foreign-currency crunch in years. But some will still want to see the currency find equilibrium before increasing exposure.<\/p>\n<p>Columbia Threadneedle Investments says the pound is already as much as 25% undervalued, when measured by its real effective exchange rate, a gauge of a currency\u2019s competitiveness against trading partners.<\/p>\n<p><button class=\"link caas-button collapse-button\" aria-label=\"\" title=\"\" data-ylk=\"elm:readmore;slk:Story continues\">Story continues<\/button><\/p>\n<p>But it also says the currency may fall even more. Deutsche Bank AG predicts the pound could weaken as much as 10% to 33 per dollar before stabilizing.<\/p>\n<p>One of the world\u2019s largest wheat importers, Egypt was hit hard by the economic fallout from Russia\u2019s invasion of Ukraine last February. Until then, it was a prime destination for volatile hot-money financing because of a combination of a pegged currency and the world\u2019s highest interest rates when adjusted for inflation.<\/p>\n<p>Lately though, authorities have begun questioning the nation\u2019s reliance on that kind of inflows, and as the crisis deepened last year, they introduced what they called a \u201cdurably flexible\u201d exchange-rate regime.<\/p>\n<p>A series of devaluations followed, helping Egypt to clinch a $3 billion loan from the International Monetary Fund. With other borrowing options closed off, Gulf allies also pledged more than $20 billion in deposits and investments to help a country they view as vital to regional security and stability.<\/p>\n<p>The last time Egypt tapped international debt markets was in March 2022, when it issued yen-denominated securities, and its last dollar debt deal was in September 2021. The country has $39 billion of eurobonds outstanding, according to data compiled by Bloomberg.<\/p>\n<p>\u2018More Mettle\u2019<\/p>\n<p>With inflation exceeding 21% in December, Egypt\u2019s central bank may have to raise interest rates further to entice more foreign investment, according to Matthew Vogel, London-based portfolio manager and head of sovereign research at FIM Partners.<\/p>\n<p>\u201cWith inflation spiking to close to 30% in the coming months and no FX anchor given the change in regime, we still think the CBE has to show more mettle,\u201d he said.<\/p>\n<p>Meanwhile the gap between the pound\u2019s official rate and the rate on the black market, which emerged as Egyptians struggled to find dollars through official channels, has narrowed. And the logjam at its ports, which added to the backlog of demand for dollars, is improving.<\/p>\n<p>\u201cIt does feel like we are closer to the end of the FX devaluation process now than the beginning,\u201d said Paul Greer, a London-based money manager at Fidelity International who is neutral on Egypt\u2019s currency and local debt. \u201cWe can expect demand to resume, especially in an environment where global inflation, global yields and the US dollar are all now pushing lower.\u201d<\/p>\n<p>Most Read from Bloomberg Businessweek<\/p>\n<p>\u00a92023 Bloomberg L.P.<\/p>\n<\/div>\n\n<br \/><a href=\"https:\/\/news.google.com\/__i\/rss\/rd\/articles\/CBMiTWh0dHBzOi8vZmluYW5jZS55YWhvby5jb20vbmV3cy9lZ3lwdC1sb2NhbC1kZWJ0LWJlY2tvbnMtcmVjb3JkLTA3MDE0MDk1Ny5odG1s0gFVaHR0cHM6Ly9maW5hbmNlLnlhaG9vLmNvbS9hbXBodG1sL25ld3MvZWd5cHQtbG9jYWwtZGVidC1iZWNrb25zLXJlY29yZC0wNzAxNDA5NTcuaHRtbA?oc=5\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>(Bloomberg) &#8212; Most Read from Bloomberg Emerging-market investors are preparing to creep back into Egypt\u2019s local debt market, enticed by a cheaper pound and record yields when compared with peers. Egypt\u2019s move to a more flexible exchange rate has revived interest in its local-currency debt, the worst performer in emerging markets last year, according to &hellip;<\/p>\n","protected":false},"author":1,"featured_media":44535,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[161],"tags":[],"_links":{"self":[{"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/posts\/44534"}],"collection":[{"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/comments?post=44534"}],"version-history":[{"count":0,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/posts\/44534\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/media\/44535"}],"wp:attachment":[{"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/media?parent=44534"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/categories?post=44534"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.brandon.ddtest.info\/multisite-test\/wp-json\/wp\/v2\/tags?post=44534"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}