Egypt will not default, says Madbouly amid investor pessimism on debt outlook

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What We're Tracking Today

Egypt will not default, says Madbouly amid investor pessimism on debt outlook

Good morning, wonderful people, and welcome to the final workday of April. That means about 32.6% of the year has passed. The upside: We have about 246 days left to hit our budgets.

PSA- It’s another short work week. Thursday, 4 May is off in observance of Labor Day, the Manpower Ministry confirmed in a statement Thursday.

THE BIG STORY here at home: Egypt will not default, says Madbouly. Prime Minister Moustafa Madbouly moved yesterday to reassure international markets about the sustainability of Egypt’s debt amid concerns among some investors that Egypt faces a rising risk of default. “I reassure you that the Egyptian state has not failed, nor will it fail, to pay back its international debt,” he said in televised statements (watch, runtime: 29:40). “Egypt respects its financial obligations … so far we have never delayed a debt payment.”

Madbouly’s comments come following a tough week in the markets: The sell-off of Egypt’s USD bonds accelerated last week as foreign investors continued to take a dim view of the country’s debt outlook. The sell-off was aggravated by S&P Global Ratings’ decision to cut its outlook on Egypt’s credit rating last week, which said that a lack of progress on privatization and reform was putting the country’s ability to meet its external funding needs in jeopardy. Moody’s jumped in last Wednesday, writing in a note that slow progress on the state’s asset sale program is contributing to “downside risk to Egypt’s debt affordability and debt sustainability profile.”

Madbouly signaled we can expect asset sales by the end of June, sayinghis government will start selling off state assets to private-sector investors before the end of the current fiscal year. The government is aiming to raise up USD 2 bn from asset sales by June, Madbouly said. That’s on par with the USD 2.5 bn June 2023 target to which we’ve committed in our loan agreement with the IMF.

More companies (including military-owned) to join the program: “The state will not back down from the privatization program … there are more companies joining,” he said, adding that the state is preparing over 10 military-owned companies for offering. President Abdel Fattah El Sisi suggested earlier this year that more military firms could be earmarked for privatization. CI Capital has been marketing bottled drinks firm Safi and fuel retailer Wataniya to strategic investors since the middle of March, but has made no public comment on the state of the transactions.

The government announced its rebooted, 32 company program in February. Talks with Gulf sovereign wealth funds on the sale of stakes in United Bank and Telecom Egypt have apparently fallen through amid expectations for a further currency devaluation. Other reports have suggested that our Gulf allies want to see more progress on reforms before investing.

Could this change now that we’re past Eid?Several press reports recently suggested that we could move towards the first sale after the Eid break. One unconfirmed report claimed the sale of United Bank was imminent, while the Public Enterprises Ministry is expected to soon publish the tender booklet for the project to refurbish Cairo’s historic Continental Hotel. Our friends at the Sovereign Fund of Egypt, meanwhile, have taken a portfolio of seven five-star hotels to market.

Subsidized commodities are about to get pricier: The government will start gradually raising the prices of commodities sold to ration card holders, Supply Minister Ali El Moselhy said during a presser yesterday (watch, runtime: 34:06). The price review will start “in the coming days,” the minister said, adding that without raising prices “the government will not be able to fund or provide these commodities.”

Food prices are rising at a record rate:Inflation jumped 32.7% y-o-y in March as prices continued to accelerate on the back of the series of currency devaluations, the foreign-currency crunch, and higher fuel prices.

ALSO FROM THE PRESSER- Egypt has 2.6 months’ worth of wheat in strategic reserves, El Moselhy said. The Madbouly government has so far bought 365k tons of wheat during this year’s local harvest, he said. The country has strategic reserves of meat sufficient for 7 weeks, he added.

AND- Customs exemptions for gold imports? The Supply Ministry is working on a proposal that would allow Egyptians living abroad to import gold to Egypt without paying customs duties in a bid to help stabilize the gold market, ElMoselhysaid. Local gold prices have more than doubled over the past year amid the ongoing foreign exchange crunch.

MORNING MUST-READ-

Yuval Noah Harari is really freaked out about AI. The Sapiens author (particularly popular among guys over the age of 35 here in Omm El Donia) writes cogently in the Economist that artificial intelligence has “hacked the operating system of our civilisation” by having “gained some remarkable abilities to manipulate and generate language, whether with words, sounds or images.”

His starting point: “We have just encountered an alien intelligence, here on Earth. We don’t know much about it, except that it might destroy our civilisation. We should put a halt to the irresponsible deployment of AI tools in the public sphere, and regulate AI before it regulates us. And the first regulation I would suggest is to make it mandatory for AI to disclose that it is an AI. If I am having a conversation with someone, and I cannot tell whether it is a human or an AI—that’s the end of democracy.” Read Yuval Noah Harari argues that AI has hacked the operating system of human civilization.

HAPPENING TODAY-

The House is back from its Eid vacation: MPs will spend their first day back debating and then voting on a bill regulating the possession of dangerous animals and dogs. The bill would introduce new controls on personal dog ownership, measures to contain the spread of stray animals, and regulations on the possession of dangerous animals. The bill has momentum after considerable media attention last month to a pitbull attack.

Among the House committee meetings today:

The Economic Affairs Committee will discuss ways to market Egyptian exports to help increase our FX revenues;
The Industrial Committee will look into issues facing Port Said and Aswan industrial zones and discuss the government’s industrial strategy;
The Environment and Energy Committee will discuss the government’s policy to expand the use of EVs;
The Arab Affairs Committee will look into Egyptian-Iraqi-Emirati-Jordanian economic partnership;
The SMEs Committee will review the impact of the FX crunch on SMEs.

On the House agenda this week:

Monday: The House will vote on amendments to the law regulating the Nuclear Power Plants Authority (NPPA), which would fully exempt from taxes all parties involved in building and operating nuclear projects.
Tuesday: Religious Endowments Minister Mohamed Mokhtar Gomaa will answer questions from MPs on the ministry’s role in reforming religious discourse and improving the finances of mosque clerics.

AND- It’s deadline day for e-invoicing registration: Self-employed professionals who work with entities required to file electronic invoices need to register on the e-invoicing system by today. The Egyptian Tax Authority earlier this month said it was exempting self-employed people who work with end consumers from the requirement to file electronic invoices following an outcry from doctors, lawyers and pharmacists.

WATCH THIS SPACE-

#1- AWID is looking at Egypt’s desalination program:The water infrastructure investment platform established by Metito and British International Investment earlier this year could be interested in building two desalination plants here, Al Borsa reports, citing Metito CEO Ramy Ghandour. Africa Water Infrastructure Development (AWID) was set up by the British DFI and Emirati water company in March to invest in water projects across Africa.

#2- Is Nahr Elkhair Development plotting an IPO? EGX-listed Nahr Elkhair Development and Investment is considering listing its EGP 100 mn subsidiary, Al Ahly Group, on the EGX, the company’s co-founder Ahmed Mohamed Sayed told Al Mal TV in an interview on Thursday (watch, runtime: 39:56.)

HAPPENING THIS WEEK-

National Dialogue kicks off: The National Dialogue will hold its first session on Wednesday. The dialogue was initially set to kick off in January but was postponed after the political parties failed to name their representatives to the sessions on time.

The African Private Equity and Venture Capital Association is holding its annual summit in Cairo this week: The event will run Monday through to Friday at the Four Seasons Nile Plaza.

It’s Fed week: Analysts expect the Federal Reserve to raise interest rates by 25 bps when it meets on Tuesday and Wednesday this week, according to Bloomberg. This would be the tenth consecutive rate hike by the central bank, which is trying to rein in stubbornly high inflation which remains significantly above target.

THE BIG STORY ABROAD-

The race to prevent First Republic from becoming the fourth US bank to collapse this year: The Federal Deposit Ins. Corporation (FDIC) has asked interested banks — JPMorgan Chase, PNC Financial, US Bancorp, and Bank of America — to submit final bids for embattled US lender First Republic Bank today with the aim of securing a buyer before tomorrow. This comes following a challenging week for the Californian bank which saw its share price tank after it reported it suffered larger-than-expected outflows during the banking crisis in March. (Reuters | Washington Post | Bloomberg | FT | Wall Street Journal | CNBC)

ALSO RECEIVING ATTENTION- A Russian fuel storage facility in Crimea erupted in flames after being attacked by two Ukranian drones, which a Ukrainian military official called “God’s punishment” on Russia. The attack destroyed over 10 tanks of oil products for Russia’s Black Sea Fleet. (Reuters | AP | DW | BBC)

The Enterprise Exports & FDI Forum, our latest industry-specific conference, is taking place on Monday, 15 May at the Four Seasons Cairo Nile Plaza The Enterprise Exports & FDI Forum will give insiders and newcomers alike the chance to talk about how to develop an export-centered business and how their companies can help Egypt build an export-led economy that makes us a magnet for foreign direct investment (FDI).

Why exports & FDI? In the wake of successive floats of EGP, exports and FDI have never been more important to our economy — or our businesses. We’re gathering some of the CEOs, top execs from local companies and multinationals, investors, bankers and finance folks to speak on how businesses can adapt their strategies to be export-oriented and what Egypt as a country can do to draw foreign investment and much-needed FX. Expect it to be heavy on lessons learned in Egypt and other global growth markets — and lots of success stories.You can learn more on our conference website here.

Some of the biggest names in business and finance are on board — are you? The Enterprise Exports and FDI Forum is taking place with the generous support of our friends, including:

Banking partners: Banque Misr | Al Baraka Bank | Emirates NBD | HSBC

Event partners: Beyti | Concrete | Global Corp | Grant Thornton | Hassan Allam Utilities

WANT TO BECOME A COMMERCIAL PARTNER? Ping a note to Moustafa, our head of commercial, here.

HAVEN’T REQUESTED AN INVITE YET? If you’re a C-suite exec, business owner, DFI staff, export executive, investor or banker, please fill out the form here to signal your interest, letting us know your name, title and where you work.

CIRCLE YOUR CALENDAR-

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.

Kokomo now open at Somabay Red Sea: Indulge in our slow-cooking methods and natural wood smoke to bring out the best in each ingredient, resulting in dishes that are both tender and flavorful. From our smoked briskets to our paellas, every dish is a tribute to the timeless tradition of cooking over an open flame, creating a unique dining experience that is sure to impress.

Visit Kokomo at the S.Cape Beach daily from 12pm until 6pm, and Kokomo at Marina daily from 6pm until 12am. For more information, please call 012 0033 3111 or 012 0044 4111.

More than 16k people cross into Egypt as Sudan fighting rages

Sudan ceasefire falters as fighting in Khartoum enters its third week: The Sudanese army and the Rapid Support Forces (RSF) militia accused each other of violating a ceasefire over the weekend as fighting continued in the capital across the capital, Reuters reported. The two sides had on Thursday decided to extend ithe ceasefire for another 72 hours, but street battles were ongoing as of last night, with the newswire reporting clashes close to the presidential palace and the army HQ.

In numbers: The conflict has so far killed 528 people and injured 4.6k others, according to the latest numbers by the Sudanese Health Ministry. These figures could get much worse in the event of a protracted conflict, as per comments made by WHO officials last week. The UN Refugee Agency on Friday put the number of internally-displaced people from Khartoum at around 40k.

UN envoy voices optimism: The two sides are “more open to negotiations” but are yet to settle on a date for talks, the UN’s special representative in Sudan, Volker Perthes, told Reuters. “They both think they will win, but they are both sort of more open to negotiations, the word ‘negotiations’ or ‘talks’ was not there in their discourse in the first week or so,” he said.

A warning from Sudan’s deposed ex-PM: Conflict in Sudan could be a “nightmare for the world,” the BBC reports former Sudanese Prime Minister Abdalla Hamdok as saying at a conference in Kenya yesterday. “This is not a war between an army and a small rebellion. It is almost like two armies — well trained and well armed,” he said, warning that the conflict could become worse than that in Syria or in Libya. Hamdok served as the country’s prime minister in the joint civilian-military government that came to power following the removal of the Bashir regime in 2020.

HERE IN EGYPT-

More than 16k people from Sudan have crossed the border into Egypt since the conflict began, according to figures released by the Foreign Ministry yesterday. More than 14k Sudanese refugees are now in the country, while some 2k people of other nationalities crossed the border, it said.

And thousands more want to enter: Sudanese families fleeing the violence are continuing to gather at the Egypt-Sudan border, with satellite imagery yesterday showing a long queue of buses lining up at the checkpoint.

Egypt has relaxed visa rules for Sudanese citizens and is allowing women, children and men over 50 into the country without a visa. Men aged between 16 and 49 are still required to have a visa.

More Egyptians evacuated: Officials rescued another 1k Egyptian citizens on Friday, bringing the total number to 6.4k, the Foreign Ministry said. The ministry will soon stop evacuating people at the Sudanese Wadi Seidna Air Base due to security risks, it said in a statement, calling on those still in Sudan to head to one of three meeting points to arrange their departure as soon as possible.

Two injured in the fighting:Two Egyptian students have been seriously injured by shrapnel, the Emigration Ministry said Friday. They are being airlifted out of the country at Port Sudan.

Shoukry continues diplomatic efforts: Foreign Minister Sameh Shoukry held talks with his South Sudanese and British counterparts, where he highlighted the necessity of ending the ongoing violence. UK Foreign Secretary James Cleverly expressed his appreciation for the Egyptian efforts to help evacuate British citizens from Sudan.

Egyptian economy to grow 4.0% in FY 2022-2023 -Reuters poll

Egypt’s economy will grow at a 4.0% clip in the current fiscal year,per the median forecast in an April poll conducted by Reuters. The figure is in line with the latest expectations from the government, the World Bank and S&P Global Ratings, all of whom have revised their forecasts for the country’s GDP growth downwards in recent weeks as global economic headwinds continue to impact us here at home. A January Reuters poll had predicted growth of 4.8% this fiscal year, which ends in June.

Looking ahead: The Reuters poll predicts growth to pick up to 4.5% next fiscal year and 5.0% in FY 2024-2025. The economy grew at a 6.6% clip last fiscal year.

More predictions from the poll:

Headline inflation will average 24.0% in FY 2022-2023 and 20.9% next year before falling back to 9.3% the year after;
The EGP will weaken to USD 34 by the end of this year, USD 35 by the end of 2024, and USD 35.07 by the end of 2025;
Interest rates will rise by another 50 bps to 19.75% by the end of this fiscal year before falling back to 18.25% by end-FY 2023-2024 and 13.75% by end-FY 2024-2025.

Egypt to launch EGP 10 bn new phase of export subsidy program

The government is set to launch the sixth phase of its export subsidy program, through which it plans to pay out some EGP 10 bn worth of overdue subsidies to exporters, according to a Finance Ministry statement. Cabinet last week approved the sixth phase of the program.

The timeline: Companies who have their documents ready can apply in a first phase from 7-11 May and will receive their payments on 5-6 July. Those that are still in the process of preparing their documents can apply between 17-31 May and will receive their subsidy payments on either 19-20 July or 2-3 August.

REMEMBER- The government in December wrapped the fifth phase of the program, which allows exporters to receive overdue subsidies in a single payment rather than in installments over four to five years, in return for a haircut. Under the program, the Export Development Fund has paid out a total EGP 42.5 bn in subsidy arrears.

More export subsidies coming: A new program is coming in July that will see the government up its spend on export subsidies to EGP 28-30 bn, from EGP 8 bn in the current fiscal year, cabinet said last month.

UAE lender Mashreq’s net income more than doubles in 1Q 2023

Mashreq reports strong earnings growth in 1Q:Emirati lender Mashreq reported net income of AED 1.6 bn in 1Q 2023, up 160% from the same period in 2022, according to its earnings release (pdf). The strong bottom-line growth was driven by a rise in net interest income, which doubled y-o-y to AED 1.7 bn in the January-March quarter, as well as a 64% rise in fee and commission income.

Bank sees steady loan + deposit growth: Mashreq’s loan portfolio rose 6% y-o-y during the quarter to AED 91.1 bn, the bank said. Meanwhile, deposits increased 6% to AED 120.2 bn.

What they said: “I am delighted to announce Mashreq’s strong financial performance in 1Q 2023, a testament to our ability to adapt to changing market conditions,” said our friend Ahmed Abdelaal, Mashreq’s group CEO. “The progress made in product expansion and geographic reach during 1Q marks a crucial milestone for the bank, with the approval of a digital license in Pakistan and considerable expansion in Egypt,” Chairman Abdul Azaz Al Ghurair said.

Egyptian talk shows cover the situation in Sudan and what it means for Egypt

A busy night back for our talking heads: On their first night back from the Ramadan / Eid season, the nation’s talking heads had their work cut out for them. They brought us coverage of the ongoing conflict in Sudan, the latest developments in our economy, and the fast-approaching return of the National Dialogue.

What does the situation in Sudan mean for Egypt? The fighting will likely impact the Sudanese stance on the Grand Ethiopian Renaissance Dam (GERD), Kelma Akhira’s Lamees El Hadidi (watch, runtime: 5:11 | 4:39). Sudan has been backing us in our stance against the dam since day one, she said — any change could have significant consequences for Egypt and the region.

Wondering what the trip from Sudan to Egypt looks like? El Hadidi took us to the Egyptian-Sudanese border, where thousands of Sudan’s residents have crossed into Egypt (watch, runtime:12:05). The Argeen border crossing now sees members of the Egyptian Red Crescent on site to offer assistance, she said. Meanwhile, in an interview on El Hekaya, Egyptian Red Crescent CEO Rami Al Nazer said the organization is providing psychological support services for children and the elderly (watch, runtime: 5:49).

More coverage: Al Hayah Al Youm (watch, runtime: 3:19) and Masa’a DMC (watch, runtime:8:56) had coverage of Egyptian authorities’ efforts to ensure the safe return of Egyptians in Sudan.

Cabinet spox made the rounds: Cabinet spokesman Nader Saad joined Masa’a DMC (watch,runtime: 7:00) and Al Hayah Al Youm (watch, runtime: 5:45) to reiterate Prime Minister Moustafa Madbouly’s statements yesterday where he highlighted Egypt’s ability to meet its international obligations. Madbouly’s speech was a “message of reassurance to Egyptians and the global community,” Saad said. The National Dialogue’s Samir Sabry also joined Al Hayah Al Youm (watch, runtime: 3:03) to weigh in on Madbouly’s statement, which we cover in detail in this morning’s What We’re Tracking Today, above.

“Gold is a long term investment,” Assistant Supply Minister Ibrahim Ashmawy told El Hekaya (watch, runtime: 4:05 | 4:26), adding that prices may see-saw in the short term but gold is always an appreciating asset. His comments came in response to Supply Minister Ali El Moselhy’s comments yesterday advising people not to sell their gold and his proposal to waive customs fees on gold imports for Egyptian expats in efforts to bring in more gold into the market and help balance prices.

Gold prices have soared amid uncertainty over the EGP:21-carat gold is currently trading at EGP 2.7k per gram, more than double the EGP 1.1k it was trading at a year ago, as Egyptians look to the precious metal to protect their savings amid a shortage of foreign currency and weakening EGP.

What can we expect from the National Dialogue? The National Dialogue will finally launch on Wednesday, bringing together various political parties, experts, officials, and the three main political, economic and social committees. Al Hayah Al Youm (watch, runtime: 5:01) and Masa’a DMC (watch, runtime: 4:40) had coverage.

War in Sudan + the Cleopatra controversy are dominating int’l headlines on 30 April 2023

South of the border: The situation on the Egyptian-Sudanese border is getting a lot of attention this morning as people in Sudan flee the fighting in Khartoum. The Associated Press, the Washington Post and the Guardian all report on the struggle of Sudanese refugees to cross the border into Egypt.

The Queen Cleopatra debacle drags on: Secretary-General of the Supreme Council of Antiquities Mostafa Waziri criticized the depiction of Cleopatra as a black woman in Netflix’s upcoming docudrama. (AFP | The Guardian | The Independent | NBC)

Lost at sea: A yacht with two Egyptians onboard made it safely to Djibouti after going missing for several days following an attack off the coast of Yemen. (Associated Press)

Capricorn Energy to pay out USD 575 mn to investors as it doubles down on Egypt. PLUS: carbon storage, new state-owned fintech, cars for expats

ENERGY-

#1-Capricorn plans big investor payouts under new leadership: The board of oil and gas firm Capricorn Energy last week said it could pay out as much as USD 575 mn to investors in the next 12 months. The move comes as the company wraps a strategic review following the ousting of its former board by investors led by activist investor Palliser Capital, killing a proposed merger with Israeli energy firm NewMed Energy. "We are not in the business of building war chests in the new Capricorn," new chair Craig van der Laan is quoted as telling Reuters.

Pivot to Egypt: The payouts include a USD 450 mn special dividend in May, and another potential USD 100 mn dividend in 4Q — depending on revenues and other outcomes at the firm’s Egyptian business, van der Laan said. The company has some USD 97 mn in receivables outstanding from Egypt. Capricorn will “materially scale back all exploration spend outside Egypt and monetize, farm-down or exit all other exploration positions” while “maximizing value of Egypt by optimizing investment, well selection and rig performance,” according to its statement.

New CEO has local experience: Capricorn also announced it had chosen Randy Neely (LinkedIn) as its new chief executive. Neely is the former president and CEO of Egypt-focused Canadian operator TransGlobe Energy.

#2- Could Germany’s Wintershall store carbon here? Wintershall Dea is studying potential offshore carbon storage sites in Egypt and Argentina, reports Carbon Economist, as the company looks to broaden the scope of its carbon capture and storage (CCS) operations beyond Europe. This comes almost a year after the German company signed a two-year MoU with state-owned Egas last year to explore CCS and low-carbon hydrogen projects in Egypt.

#3- Private-sector players given green light to establish small-scale power stations: The Egyptian Electric Utility and Consumer Protection Regulatory Agency (Egyptera) has handed out permits to companies to establish electricity generators with a combined capacity of 48 MWs, agency head Mohamed Moussa told Al Borsa. The permits were awarded to Intro Group subsidiary Intro Power and Utilities, Interstate Paper Industries, Petrobel — a JV between Eni and the Egyptian General Petroleum Corporation subsidiary, land reclamation company Lina Company, and Ascom Geology and Mining.

FINTECH-

State-owned Banque Misr plans to launch a new e-payments company within the next three months, Asharq Business reports, citing two unnamed sources it says are familiar with the matter. The state-owned lender is awaiting a license to launch the firm, which will bring new e-payments products and services to the market, the sources said, without revealing further details. Banque Misr currently owns a c.10% stake in e-payments giant Fawry.

AUTOMOTIVE-

It just got easier for expats to bring their cars into Egypt: The Customs Authority has approved further facilities for the import of passenger cars for expats living in Egypt, Egyptian expats, and tourists, according to a statement. The changes allow passenger vehicles to be temporarily released for up to six months, and replace custom duties and other fees with a payment of up to USD 275.

No, this is not the expat car import scheme:The move was introduced in 2020 with the aim of attracting FX into Egypt and helping people bring in their passenger vehicles from abroad during the time of the coronavirus, when travel was suspended.

Renewables, war in Sudan, and railways get attention in Egyptian president’s meeting with Austria’s chancellor

President Abdel Fattah El Sisi will visit Austria, accepting an invite from Austrian Chancellor Karl Nehammer after the two met in Cairo on Thursday, according to an Ittihadiya statement. The date of the visit is yet to be determined. El Sisi will sign an agreement on migration during the visit, according to an Austrian statement.

El Sisi and Nehammer discussed cooperation on transport, manufacturing, and renewables, as well as regional issues including the conflict in Sudan with their wider delegations, the Ittihadiya statement reads. The Austrian side said Nehammer noted the “great potential” for Austria to import green hydrogen from North Africa while in Cairo.

Austria helps localize our railways: Egyptian National Railways signed an agreement with Austrian company Voestalpine to up capacity at the Abbasiya rail switch workshop and establish a new production line for high-speed rail switches. The authority also signed an agreement with Austria’s Plasser & Theurer to repair and maintain rail maintenance equipment.

Opening the door to Austrian investors: Prime Minister Moustafa Madbouly highlighted the potential for more Austrian investment in Egypt at a roundtable for business leaders from the two countries that he co-chaired with Nehammer.

MEANWHILE- Egypt will host next year’s annual meeting of Arab financial institutions, International Cooperation Minister Rania Al Mashat said yesterday during this year’s edition of the meetings being held in Morocco. The meeting brings together a number of Arab ministers, central bank governors, and representatives from regional and international financial institutions.

ALSO FROM THE MEETINGS- Finance Minister Mohamed Maait discussed the future of taxes amid the global move towards digitization with the Organization for Economic Cooperation and Development’s (OECD) tax chief, Manal Corwin, the Finance Ministry said in a statement. Maait praised the organization’s proposal for a globalminimumcorporate tax, which would subject multinationals to a 15% minimum tax rate.

Investors are growing more concerned about an Egypt default

The cost of insuring Egypt’s debt just hit a record high: The country’s five-year credit-default swaps (CDS) are trading at a record discount to their one-year counterparts, Bloomberg reports — suggesting that investors are more worried than ever about the nation’s short-term default risk. Egypt’s one-year credit-default swaps rose 1k bps to 2.3k bps in April, while the five-year contract rose c.390 bps to 1.7k bps during the same month, the business news outlet reports. “The inversion in the credit curve is certainly indicative of the market pricing in a higher chance of near-term default risk,” said Columbia Threadneedle Investments analyst Gordon Bowers. Current bond prices suggest a 75% chance of default over the next 10 years and a 15% chance over the next six months, according to Tellimer calculations.

Remember: S&P Global last week became the last of the big three rating agencies to take negative action on Egypt, cutting its outlook to negative due to rising risks that the country will not be able to meet its external funding requirements.

Reform is key to reassuring investors: “The market is getting quite impatient on the lack of progress” in implementing the economic reforms Egypt has pledged to make as part of its USD 3 bn IMF assistance package, which include securing external financing through the privatization of state-owned assets, Bloomberg quotes Bowers as saying. The Financial Times is also reporting on the apparent delays in securing the investment that Gulf countries have pledged to Egypt.

Also worth knowing:

SoftBank wants to take British chipmaker ARM public in New York: SoftBank’s chipmaking business ARM has submitted the required documentation registering for listing on the US stock exchange, potentially marking this year’s largest IPO. (Reuters)
Hedge funds burned by tech rally: Hedge funds with short positions on tech have been caught out by last week’s rally, losing USD 18 bn after a string of positive earnings releases sparked a rebound in tech shares. Meta, Microsoft, Alphabet, and Amazon have all recorded strong earnings in recent days, prompting their shares to soar and helping S&P 500 to close the month up 1.5%. (Financial Times | Bloomberg)
EM hasn’t seen anything yet: That’s according to the world’s largest listed hedge fund, Man Group, which thinks the sell-off in emerging-market debt since February is about to get “much more violent.” (Bloomberg)
France downgraded: Fitch Ratings has downgraded France’s credit rating to AA- with a stable outlook, citing weak growth and recent social unrest triggered by Macron’s controversial pension reforms. (Fitch Ratings)

EGX30	17,797	+2.0% (YTD: +21.9%)
USD (CBE)	Buy 30.83	Sell 30.96
USD at CIB	Buy 30.85	Sell 30.95
Interest rates CBE	18.25% deposit	19.25% lending
Tadawul	11,271	-0.3% (YTD: +7.6%)
ADX	9,789	+0.4% (YTD: -4.1%)
DFM	3,545	+0.8% (YTD: +6.3%)
S&P 500	4,170	+0.8% (YTD: +8.6%)
FTSE 100	7,871	+0.5% (YTD: +5.6%)
Euro Stoxx 50	4,359	+0.03% (YTD: +14.9%)
Brent crude	USD 80.33	+2.7%
Natural gas (Nymex)	USD 2.41	+2.3%
Gold	USD 1,999.10	0.0%
BTC	USD 29,250	-0.4% (YTD: +77.1%)

THE CLOSING BELL-

The EGX30 rose 2.0% at Thursday’s close on turnover of EGP2.55 bn (about 42% above the trailing 90-day average). Local investors were net buyers. The index is up 21.9% YTD.

In the green: Ibnsina Pharma (+9.1%), Oriental Weavers (+6.9%) and AMOC (+5.5%).

In the red: CIRA Education (-3.0%), Ezz Steel (-1.4%) and Juhayna (-0.8%).

US, Iran seize oil tankers as tensions rise

The US and Iran play Battleship with oil tankers: US authorities in recent days seized a tanker carrying Iranian crude on its way to China, prompting Tehran to capture a US-bound vessel carrying Kuwaiti crude, the Financial Times reports. Washington’s move is the latest in its efforts to enforce its sanctions against the Iranian oil trade over its nuclear program. The tug of war is no novelty: Iran — which is known for seizing tankers in retaliation against similar moves by Western countries — last year confiscatedtwo Greek tankers in the Gulf after the US tried to capture a cargo of Iranian oil near Greece.

Another country begins to ditch the greenback: Argentina has become the latest country to jettison the USD in its trade with China, announcing Wednesday that the two countries will now use the CNY for bilateral trade. (Argentina Economy Ministry).

CALENDAR

APRIL

April: SCZone roadshow in China.

April: SCZone to begin providing ship bunkering services in the Suez Canal’s ports.

26 April - 5 May (Wednesday-Friday): African Basketball Championship.

30 April (Sunday) House of Representatives back in session.

30 April (Sunday): Tenth of Ramadan dry port tender deadline.

30 April (Sunday): Deadline for self-employed to register for e-invoicing.

30 April (Sunday): Deadline for corporate tax returns.

30 April (Sunday): End of Mediterranean, Nile Delta oil + gas exploration tender.

Late April – 15 May: 1Q2023 earnings season.

MAY

1 May (Monday): Labor Day.

1 May (Monday): Deadline to apply to VC funds program by GIZ Egypt, AfricaGrow and Dutch development bank FMO.

1-5 May (Monday-Friday): African Private Equity and Venture Capital Association annual summit, Four Seasons Nile Plaza, Cairo.

2 May (Tuesday): National Paints Holding’s and Eagle Chemicals’ MTOs for Pachin ends.

2-3 May (Tuesday-Wednesday): Federal Reserve interest rate meeting.

3 May (Wednesday): National Dialogue begins.

4 May (Thursday): National holiday in observance of Labor Day (TBC).

4 May (Thursday): IEF-IGU Ministerial Gas Forum, Cairo.

7 May (Sunday): Senate back in session.

7-11 May (Sunday-Thursday): First round of applications for sixth phase of export subsidy program.

9-11 May (Tuesday-Thursday): First edition of the Arab Actuarial Conference, Cairo.

12-15 May (Friday-Monday): Egypt Fashion Week.

14 May (Sunday): Expat car import scheme ends.

14 May (Sunday): EgyptAir to launch a new route to Dhaka, Bangladesh.

14 May (Sunday) Egytrans’ shareholders to vote on NOSCO acquisition.

15 May (Monday): Enterprise Exports & FDI Forum, Four Seasons Hotel Cairo at Nile Plaza.

16-18 May (Tuesday-Thursday): Egypt will host its first conferenceon cybersecurity and defense intelligence systems (CDIS-Egypt).

17-31 May (Wednesday - Wednesday): Second round of applications for sixth phase of export subsidy program.

18 May (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

19 May (Friday): Arab League summit, Riyadh.

19-21 May (Friday-Sunday): G7 summit, Hiroshima, Japan.

20-21 May (Saturday-Sunday): eGlob Expo, St. Regis Almasa Hotel, Cairo.

22-26 May (Monday-Friday): Egypt will host the African Development Bank (AfDB) annual meetings in Sharm El Sheikh.

30 May (Tuesday): Listed companies have until this date to report and publish their 1Q results.

JUNE

June: Indian representatives to discuss prospect investments in the Suez Canal.

7-10 (Wednesday-Saturday): The second edition of Africa Health Excon.

10 June (Saturday): Thanaweya Amma examinations begin.

12 June - 15 July (Monday-Saturday): Thanaweya Amma exams.

13-14 June (Tuesday-Wednesday): Federal Reserve interest rate meeting.

15 June (Thursday): Deadline for bids in EGPC’s mature oil fields tender.

19-21 June (Monday-Wednesday): Egypt Infrastructure and Water Expo debuts at the Egypt International Exhibition Center.

22 June (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

28 June-2 July (Wednesday-Sunday): Eid El Adha (TBC).

30 June (Friday): June 30 Revolution Day.

30 June (Friday): Egypt to exit Grains Trade Convention.

JULY

1 July: House of Representatives deadline to approve the FY 2023-2024 budget.

1 July: GAFI to launch the country’s first integrated electronic platform to facilitate setting up a business.

5 - 6 July (Monday - Tuesday): Gov’t to pay out subsidies to first wave of applicants under its sixth export subsidy program.

18 July (Tuesday): Islamic New Year.

19 - 20 July (Wednesday - Thursday): Gov’t to pay out subsidies to second wave of applicants under its sixth export subsidy program.

20 July (Thursday): National holiday in observance of Islamic New Year (TBC).

23 July (Sunday): Revolution Day.

25-26 July (Tuesday-Wednesday): Federal Reserve interest rate meeting.

27 July (Thursday): National holiday in observance of Revolution Day.

Late July-14 August: 2Q2023 earnings season.

AUGUST

August: Hassan Allam Utilities + Agility to open Yanmu East logistics park.

2 - 3 August (Wednesday - Thursday): Gov’t to pay out subsidies to second wave of applicants under its sixth export subsidy program.

3 August (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

10 August (Thursday): Shalateen Mineral Resources gold mining tender closes.

22-24 August (Tuesday-Thursday): BRICS summit, Johannesburg, South Africa.

SEPTEMBER

September: Sustainable Debt Coalition Initiative agreed at COP27 to launch.

9-10 September (Saturday-Sunday): G20 summit, New Delhi, India.

15 September (Friday): IMF to review USD 3 bn program.

19-20 September (Tuesday-Wednesday): Federal Reserve interest rate meeting.

21 September (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

21-23 September (Thursday-Saturday): Narrative PR Summit, Somabay.

25 September (Monday): Nasdaq deadline for Swvl Holdings Corp to increase its market value of publicly held shares to a minimum of USD 15 mn.

26 September (Tuesday): Prophet Muhammad’s birthday (TBC).

28 September (Thursday): National holiday in observance of Prophet Muhammad’s birthday (TBC).

OCTOBER

October: Deadline for ins. providers to link their databases with the FRA.

2-5 October (Monday-Thursday): ADIPEC 2023, Abu Dhabi National Exhibition Center.

6 October (Friday): Armed Forces Day.

13 October- 20 October (Friday-Friday): The sixth edition of El Gouna Film Festival (GFF).

Late October-14 November: 3Q2023 earnings season.

26 October (Thursday): Daylight saving time ends.

31 October - 1 November (Tuesday-Wednesday): Federal Reserve interest rate meeting.

NOVEMBER

November: Cairo to hostIntra-African Trade Fair.

2 November (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

15-24 November (Wednesday-Friday): Cairo International Film Festival, Cairo.

DECEMBER

12-13 December (Tuesday-Wednesday): Federal Reserve interest rate meeting.

21 December (Thursday): Central Bank of Egypt’s Monetary Policy Committee meeting.

EVENTS WITH NO SET DATE

2023: The inauguration of the Grand Egyptian Museum.

2023: Egypt will host the Asian Infrastructure Investment Bank’s Annual Meeting of the Board of Governors in 2023.

Summer 2023: EGX to launch a shariah-compliant index.

1H 2023: GAFI roadshow set to launch to drum up foreign investment for golden licenses

1H 2023: Abu Dhabi Islamic Bank intends to launch a digital consumer finance company

2H 2023: Egyptian government expected to sign agreements with a consultant for the EuroAfrica electricity interconnector.

2H 2023: President Abdel Fattah El Sisi and Turkish President Recep Tayyip Erdogan expected to hold a summit.

4Q 2023: EGX to launch its new futures exchange.

End of 2023: A Developments’ first phase of the Lazoghly development completed.

November 2024: Egypt to host the 12th session of the World Urban Forum (WUF12).

2Q 2025: Safaga Terminal 2 to initiate operations.

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