**#1 Is Egypt at risk of another “full-blown” FX crisis? Egypt is one of seven countries that face the risk of a foreign currency crisis, Bloomberg says, citing recent research from the by Japan’s Nomura Holdings. Argentina, Turkey, South Africa, Ukraine, Sri Lanka, and Pakistan are also on the list of risk-prone countries identified using the early warning model known as Damocles, which “examines a variety of factors including foreign-exchange reserves, debt levels, interest rates and import cover.” The report urges investors to “differentiate between economies across emerging markets,” identifying those with a lower risk profile and recognizing the entry opportunities they currently present, as volatility from the EM sell-off subsides over the coming few months. Lowest on the risk spectrum are Russia, Indonesia, Brazil, Peru, Philippines, and Thailand. The FT also has the story.

Analysts see promising signs that the EM Zombie Apocalypse could wind down over the coming months, they tell Bloomberg separately. Nomura’s report came as a drop of 1.3% in the INR against the USD this week raised fresh concerns about whether emerging markets can sustain more hits, especially those with wider account deficits, high inflation, and a high level of foreign ownership of domestic debt. One view, however, sees the EM sell-off waning off in a few months, with a good indication of that being that most current account deficit levels are lower than they used to be and that inflation levels are largely “tame.”

**#2 Egypt cancels second T-bond sale this month due to high yields: Egypt canceled a sale of EGP 3.5 bn worth of five- and 10-year instruments on Monday, according to central bank data, with sources telling Al Mal that high yields on demand were behind the decision. Investors reportedly requested yields ranging from 18.90-18.95%, with some even asking for returns as high as 19.10% and 19.25% for the longer-term offering, the sources also said, adding that the Finance Ministry is likely to resort to the National Investment Bank to arrange the financing it had intended to raise through treasury sales. Reuters also has the story.

Reax: “‘What the government is doing, cancelling these auctions due to high yields, is very logical. How can the government sell at these prices for 10 years? ... We want to shrink the budget deficit, not increase it. It’s best to focus on treasury bills in the coming period,’ one banker who spoke on condition of anonymity told Reuters.”

Background: Rising yields — which had hit highs of 19.64% and 19.31% at a Sunday auction for three- and nine-month bonds — had prompted the government to cancel another T-bond sale last week amid reports from the Finance Ministry that it was working on drafting a comprehensive debt control strategy that could rollout as early as October and see government bond issuances limited to medium-to-long term offerings. The plan, which could also see FX-denominated bond sales scrapped this year, would also set limits on internal and external borrowing in a bid to push overall debt levels down to 91% of GDP from a current 98%. The country’s foreign debt levels at the end of FY2017-18 stood at USD 92.64 bn, up from USD 88.2 bn at the end of third quarter in March.

**#5 Headline inflation inches up again in August after brief slowdown in July, monthly core inflation eases to 1.8%: Annual headline inflation climbed to 14.2% in August, up from 13.5% in July, data from the central bank showed on Monday (pdf). Annual core inflation — the CBE’s preferred gauge, which strips away volatile items such as food — was also up in August to 8.8%, compared to 8.5% in July. Monthly headline inflation, meanwhile, eased to 1.8% last month from 2.4% the month before.

Where had we left inflation? Inflation levels had cooled slightly in July after surging to a high of 14.4% in June, accelerating for the first time in a year as the result of increases to the costs of fuel, power, and transportation in July, as the government continued to gradually phase out subsidies.

Color: The figures suggest that “inflation is not a concern anymore,” according to Pharos Holdings’ Radwa El Swaify, who tells Bloomberg that “we’re comfortably on track to achieve the central bank’s target by the end of the year.” Naeem’s Allen Sandeep told Reuters that “the uptick in August was due to the direct or indirect impact of subsidy cuts and was broadly in line with expectations,”.

You heard it here first: The central bank’s Monetary Policy Committee will leave interest rates on hold at its 27 September meeting. “If you look at the spread between the central bank’s discount rate and the headline figure it’s still three percentage points, so there’s enough room for the CBE to keep rates where they are,” Sandeep said. “Everyone is raising rates because of weaker currencies and rising inflation and so on. So we’re sort of an exception if you look at the bigger picture globally.” Conditions in global markets — including a broad emerging markets sell off, rising US interest rates, and a strengthening USD — are also expected to encourage the CBE to maintain its tight fiscal policy until the end of 2018 in order to “keep foreign investors in the debt market,” El Swaify said.

**#6 The Natural Gas Regulatory Authority has postponed the issuance of natural gas import licenses to private sector companies, saying the private sector is “unprepared,” according to an EGAS source. EGAS has renewed preliminary approval to grant Qalaa Holdings’ TAQA Arabia, BB Energy and Fleet Energy the import licenses, effectively giving them additional time after all three allegedly failed to submit paperwork to obtain the final license, according to the source. The preliminary approvals, which are renewed every six months unless a permanent license is obtained, must be ratified by the authority.

Take this with a grain of salt: When all three companies fail to file paperwork on time, that’s not the private sector being “unprepared,” it’s the business sending a message to government about license terms — and the regulator putting on some pressure in public. We suspect we’re not the only ones who hear echoes here of round one in the solar energy feed-in-tariff imbroglio.

Background: The authority was given the green light in July to begin issuing and revoking licenses for private players in the natural gas industry, a move that was made possible by the deregulation of the sector through the Natural Gas Act. Sources had said at the time that the first import license would likely be issued before the end of 2018.

**#7 IPO WATCH- CIRA Announces price range for IPO, first day of trading by 1 October: Leading private-sector education provider Cairo Investment and Real Estate Development’s (CIRA) expects to price its IPO at EGP 5.45 to EGP 6.30 per share as it moves ahead with an offering of nearly 38% of the company to both international and domestic investors. The subscription period for the domestic offering opened on Monday, according to the public subscription notice (PSN, here in pdf).

That price range would give the company a market cap of up to EGP 3.45 bn at the opening bell on the first day of trading. The company plans to price its shares on or around 22 September once the bookbuilding process ends. CIRA is looking for stable institutional investors, offering some 192 mn shares to global institutional investors and just over 14 mn to retail investors in Egypt. Trading in CIRA’s shares on the EGX is set to start on 1 October. CIRA’s website has key IPO-related documents here.

Where’s the money going? Proceeds from the offering will be used in part to finance expansion plans, with the company eyeing entry to new markets such as the Gulf, Europe, and South Africa.

Advisers: EFG Hermes is sole global coordinator and bookrunner for the transaction. Al Tamimi & Co. is acting as the issuer’s local counsel, while Zulficar & Partners is domestic counsel to the underwriter. White & Case is international counsel to the issuer, while Gide Loyrette Nouel is doing duty for the global coordinator and bookrunner. Inktank Communications is serving as investor relations advisor to CIRA.

IPO WATCH- Five state companies to list, sell shares in the EGX in 1Q2019: It appears that the Madbouly Cabinet has settled on five companies to kick-off the second phase of the state privatization program in 1Q2019, Finance Minister Mohamed Maait told Al Mal on Tuesday. While he did not name the companies, he noted that some of the companies will be IPO. A Finance Ministry source had told us this week that Enppi will “likely” list shares in an IPO in 1Q2019. Based on previous comments by state and banking officials, we anticipate that Banque Du Caire is likely to list in 1Q2019, though that has yet to be confirmed officially. The source expects that a maximum two state companies will list shares in FY2018-19.

Eastern Company, AMOC will pilot program next month: Maait also revealed that Alexandria Mineral Oils Co. (AMOC) will join Eastern Company in launching the state privatization program in October in the second shakeup of the program’s phase one timeline since it was announced in July. Eastern and Heliopolis Housing and Developing (HHD) were originally slated to pilot program, but Public Enterprises Minister Hisham Tawfik suggested that Alexandria Container and Cargo Handling (ACCH) had replaced HDD for an October slot.

A little side note on AMOC: The firm will reportedly convert 500k shares into GDRs on the London Stock Exchange next week.

Advisors for Eastern, AMOC are in place: We have exclusively reported that HSBC has won the mandate to lead the sell-down of AMOC. EFG Hermes was tapped to manage the 4.5% sale of Eastern Company. Zaki Hashem & Partners, Zulficar & Partners, and Matouk Bassiouny are the shortlist to serve as legal counsel on the Eastern sale.

**#8 M&A WATCH- Suez Cement to sell Minya white cement plant to Emaar Industries: Suez Cement subsidiary Helwan Cement has agreed to sell its white cement plant in Minya to Emaar Industries, the company said in a statement (pdf). The transaction comes as Suez Cement looks to continue to bolster its financial position under and ongoing restructuring plan, the statement suggests. “We are delighted to have signed the SPA on the sale of the white cement plant in El Minya which is in line with the Company and Heidelberg’s strategy to focus on its core operations, grey cement production and divest non-core operations yielding attractive returns to our shareholders,” our friend Jose Maria Magrina, CEO of Suez Cement, said in the statement. The sale is pending approval from the Financial Regulatory Authority and Suez Cement’s general assembly. The statement did not put a value on the sale.

Advisers: Suez Cement was advised by EFG Hermes (financial advisor) and Zulficar and Partners (legal counsel).

INVESTMENT WATCH- BP to invest USD 2 bn in Egypt next year: BP is planning to invest USD 2 bn in Egypt in 2019, BP North Africa Regional President Hesham Mekawi tells Al Shorouk in an interview. BP Group CEO Bob Dudley had said back in February that the firm was investing USD 1 bn in 2018. Mekawi suggested that BP invested a total of USD 2.5 bn in Egypt in 2018, down from around USD 4 bn in 2017. Investments this year and next year would go towards bringing a number of wells into production, upgrading facilities, as well as redoubling exploration efforts. BP is currently looking to bring phase two of its West Nile concessions in Fayoum and Giza to production before the end of the year. Production at Raven field should begin in 2019, bringing total production from the phases one and two of the West Nile Delta concessions to 1 bcf/d.

Cabinet economic group to review how land is allocated to industry: Prime Minister Mostafa Madbouly met on Monday with the cabinet economic group to look into establishing a new committee to review how land is allocated to industry, according to a Madbouly Cabinet statement. The committee would be mandated with putting in place clear standards for allocating land, creating a website through which the Industrial Development Authority (IDA) can list available land plots and the time and details for their tenders, which had been expected to launch in June. Members of the committee will include the vice minister of finance for fiscal policy, the head of the IDA, and representatives from the New Urban Communities Authority, the Federation of Egyptian Industries, and the Egyptian Junior Business Association.

Looking into real estate tax? Meanwhile, the Finance Ministry has reportedly agreed to set up a joint committee with the Union of Egyptian Investors Associations (UEIA) to resolve real estate tax issues, association head Mohamed Farid Khamis said on Monday.

Egypt, Cyprus contract European company to link power grids: Egypt and Cyprus have reportedly reached an agreement in principle with an unnamed European company to link the two countries’ power grids, an unnamed source from the Electricity Ministry tells Al Mal. The project will cost an estimated USD 1.5 bn, the source says, and contracts should be signed by next year.

Background: President Abdel Fattah El Sisi had met in June with executives from EuroAfrica Interconnector to discuss the project after EuroAfrica finished feasibility studies. The project, which could see the two countries exchange up to GW of power, is also expected to extend into Greece and will take about 36 months to complete, sources had previously said.

Gov’t expands PPP schools program to 1,000 and launches second phase in Dec: It appears that the government has substantially increased the scope of its public-private partnership (PPP) program to develop schools to 1,000 schools from 200, according to Ater Hanoura, who heads up the Finance Ministry’s PPP unit. Phase two of the program alone will consist of 200 schools, he noted. The tender for these schools was moved to December after initially being slated for July. Five companies, including CIRA, won the right to develop and operate schools under phase one of the program.

TOURISM WATCH- Thomas Cook says bookings not hit by death of couple in Hurghada, on track for 30-35% increase in its Egypt volume this year: Thomas Cook expects its Egypt bookings to grow 30-35% this year compared to last, the British company’s Egyptian agent, Moody El Shaer, told Reuters’ Arabic service on Monday. El Shaer is also optimistic about the winter 2019 season, saying bookings for the holiday season through Thomas Cook alone will be responsible for a 25% increase in Egypt’s overall tourist arrivals next year. El Shaer said bookings have not been affected by the deaths of two English tourists at a Hurghada hotel last month.

Growing Chinese tourism: Tourism Minister Rania Al Mashat met yesterday with the head of an unnamed Chinese company that is working with Sichuan Airlines to run three weekly flights to Egypt starting October, Al Mal reports.

Italian tourist arrivals double: The number of Italians visiting Egypt is on track to rise 96% year-on-year to 500k arrivals, an unnamed official from the Tourism ministry said.

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