New debt issuance keeping interest rates high for Egypt

A “flood of new issuance is offsetting foreign-investor demand for Egyptian debt, keeping yields among the highest in emerging markets,” Ahmed Namatalla writes for Bloomberg. The Finance Ministry says offshore investors increased their holdings of Egyptian treasuries to EGP 79 bn at the March, Namatalla writes, adding that government borrowing is already 11% higher than target this year and 18% over budget. “High interest rates are a temporary side-effect, without which the [EGP] float wouldn’t have achieved its purpose of attracting foreign capital … they’ve put Egyptian assets back on the investment map. So, for foreigners, it makes sense to rush to get a piece of the pie,” CI Capital economist Hany Farahat says. However, Farahat added that he expects the budget deficit in FY 2016-17 to come at 12%, higher than the government’s projection of 10.7%.