The recently debuted Citizen Bond brought in EGP 2 bn in just its first week, a government official tells EnterpriseAM. By bypassing traditional banking channels and offering the bonds directly to citizens, the Finance Ministry is looking to diversify and restructure its local debt, economist Hany Abou El Fotouh tells us.

Much of this is fresh liquidity targeting government debt, with the bonds primarily attracting those with traditional bank deposits and older people without the risk appetite for stocks, Evolve Holding CEO Sameh El Torgomon tells EnterpriseAM. Liquidity in the EGX shouldn’t be affected by the bonds in any meaningful way, he added.

Why this matters: Banks have long enjoyed a comfortable carry trade, taking low-cost deposits and lending them on at a margin. If the Citizen Bond scales — the appetite seems to be there — banks might be tempted to raise their own rates to stay competitive with the offering’s current 17.75% return.

It’s unlikely, however, that savers will break with their current savings certificates to buy the new bonds given the high cost of withdrawing before maturity, industry insider Mohamed Abdel Moneim told us.

While Citizen Bonds may pose a challenge to banks, gold’s appeal will remain unaffected. The precious metal will remain the primary hedge for everyday Egyptians looking to preserve wealth in the long term, Chamber of Commerce Gold Division head Hani Milad tells us. Gold has “no rival,” he explained, pointing to gold’s over 70% rise in the last 12 months and nearly 20% increase YTD.

What’s next? The Finance Ministry intends to make this a monthly fixture. Every new issuance will feature a variable rate, allowing the state to adjust its cost of borrowing in real-time based on the interest rate environment. The subscription for the current tranche remains open until 8 March.

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