As expected: Moody’s downgrades all five Egyptian banks in its coverage universe

1

What We're Tracking Today

IMF review of Egypt’s USD 3 bn loan to come before the end 2023

Good morning, wonderful people, and happy Thursday to you all. The week ends as it began, with news of a downgrade — and entirely expected one, as Moody’s wraps up its review of the five banks in Egypt that it covers.

THE BIG STORY HERE AT HOME- Our IMF loan review will come before the end of the year, Finance Minister Mohamed Maait told CNBC Arabia (watch, runtime:7:08) yesterday, without elaborating further. The IMF has delayed two reviews of our USD 3 bn assistance program after we failed to meet several conditions of the loan, including a commitment to implement a fully flexible exchange rate. IMF Managing Director Kristalina Georgieva recently said that the two sides are making progress on the review — and warned that we would continue to “bleed” reserves if we do not float the EGP. Maait was speaking on the sidelines of the IMF and World Bank annual meetings.

MEANWHILE- It feels a lot like MENA day at the IMF and World Bank annual meetings: Jihad Azour, the institution’s director for the Middle East and Central Asia, is scheduled to give a press briefing this morning and will later join Abu Dhabi Commercial Bank’s Monica Malik and others for a discussion about sustainable growth in the region. Maait will share the stage with the IMF”s deputy managing director Gita Gopinath at midday for an IMF seminar on “ boosting growth with domestic resources.”

What else is happening: The Civil Society Policy Forum is kicking off a day full of meetings on the MENA region, including discussions on social protection and the oversight of World Bank-funded projects.

WATCH THIS SPACE-

#1- Will the EGP be pegged against a basket of currencies? Fakhry El Fiqi, the head of the House Planning and Budget Committee, thinks so, telling Masaa DMC on Monday that authorities will likely reach an agreement with the IMF in 1Q 2024 on a new currency regime (watch, runtime: 13:07). El Fiqi said the EGP would be pegged to a basket of hard currencies including the USD, EUR, JPY, and GBP, as well as gold.

El Fiqi’s claims have been disputed: A state official, speaking on condition of anonymity, told Bloomberg Egypt wasn’t looking at a peg.

It seems to us that some officials are being careful to talk about an “index” as distinct from a “peg” — and it’s not immediately clear what the difference is. Asked yesterday whether we’re moving to a peg, a senior government official told us, “The USD will have the largest impact on the index, seeing its significance for commercial transactions and import bills. But the index aims to offer a stable indicator, showing the fair value of the EGP in comparison to other currencies.” Like El Fiqi, the official suggested that the index could launch in 1Q 2024 and said that the move will help strengthen our position in front of the IMF when the time comes to review the health of the economy ahead of unlocking more tranches of our USD 3 bn facility.

Remember: Central Bank of Egypt governor Hassan Abdalla last year floated the idea of setting up a currency index against which to value the EGP. The index, he said at the time, would be made up of several currencies and potentially gold. Egypt needs to stop “measuring” the EGP against the greenback to help people get used to the idea of a free-floating currency that is not pegged to the USD, Abdalla said at the time.

#2- Our debt service burden will continue to increase: The amount of money we need to earmark for debt service will “increase rapidly over the next few years,” in turn increasing our deficit, Ruud De Mooij, the IMF’s deputy director of fiscal affairs said during a press briefing yesterday. Our debt service currently takes up some 7% of our GDP, he said.

How can Egypt fill this gap? De Mooij pointed to reducing tax exemptions, cutting government spending by lifting fuel subsidies, and taking greater strides in our privatization program as ways to garner up some additional revenue.

Remember: Our debt load is already high. Egypt is going to have to spend USD 29.2 bn on debt service in 2024 alone, equating to more than 80% of its foreign reserves.

HAPPENING THIS WEEK-

Your trip to the grocery store could be a bit more affordable come Saturday: Business leaders and the Madbouly government agreed to reduce the prices of ten key food items by 15-25% in an attempt to tackle soaring food price inflation and ease the burden of the cost of living crisis. Inflation data from state statistics agency Capmas released earlier this week showed food and beverage prices rocketing 73.6% y-o-y as of September this year.

The plan looks like it's already in full swing:Ports welcomed 60k tons of beans and 150k tons of rice, Federation of Chambers of Commerce general secretary Alaa Ezz said during a phone-in with Ala Mas’ouleety (watch, runtime: 13:12). Ezz added that GASC had managed to secure 250k tons of Indian rice despite the country’s export ban and supplied factories with thousands of tons of sugar.

And manufacturers have been getting a helping hand: The Madbouly government has also started prioritizing goods needed by local food manufacturers from ports, Al Borsa reports, citing sources it says are in the know. The government is providing food manufacturers with the needed FX to secure imports as well as custom breaks in return for manufacturers reducing their prices.

PSA- Bidding deadline for 5 gold mine concessions extended: Shalateen Mineral Resources Company extended the deadline for companies to bid for gold mine concessions in five areas of the Eastern Desert to November from the previous 10 August deadline, Asharq Business reports.

THE BIG STORY ABROAD-

Israel’s formation of a unity government and Gaza’s humanitarian crisis are dominating the world’s front pages. Fiery rhetoric from Netanyahu that ‘every Hamas member is a dead man’ and a buildup of troops along the Gaza fence has led to many outlets to ask when, not if, a ground assault on Gaza may be launched. We have the latest in the news well, below. (Associated Press | Reuters | Bloomberg | Financial Times | New York Times | Washington Post | Wall Street Journal | BBC)

CORRECTION-

We goofed on the IMF figures yesterday: Our coverage of the IMF’s latest World Economic Outlook incorrectly attributed the Egypt growth figures to the 2023 and 2024 calendar years, instead of the FY 2022-23 and FY 2023-24 fiscal years. We have amended the story on our website. H/t Rafik S.

Oceanman is coming back to Somabay Red Sea for the third year in a row on 20-21 October 2023. More than 500 swimmers from 34 different countries worldwide. Uniting both professional and amateur open water swimmers from all over the world. Different races for athletes of all levels: 10 km, 5 km, 1.5 km and 3 x 500 m relay. Tap or click the image above for the experience of a lifetime.

It was expected: Moody’s downgrades credit rating of five Egyptian banks after cutting the sovereign ceiling

Moody’s Investors Service has downgraded the long-term deposit ratings of five local banks that had been on review since May, the rating agency said in a note Tuesday.

This was expected:The downgrades follow Moody’s decision last week to cut our sovereign credit rating deeper into junk territory due to rising debt risks and the prolonged foreign-currency shortage.

Who was on the cutting block? State-owned lenders National Bank of Egypt, Banque Misrand Banque du Caire, as well as the country’s largest private-sector bank, CIB, all had their credit ratings downgraded to Caa1 from B3, seven notches into junk territory and four above default. Meanwhile, Moody’s downgraded the rating of Intesa Sanpaolo’s Bank of Alexandria rating to B3 from B2. The credit outlook for all five banks was changed from negative to stable, in line with Egypt’s sovereign credit.

All five banks (the only ones Moody’s covers in Egypt) had their baseline credit assessment, or “BCA” in Moody’s-speak, lowered to caa1, in line with the sovereign rating. The BCA reflects Moody’s view of the macro environment in which the bank operates, measures of each bank’s solvency and liquidity, and a range of qualitative factors. You can read more about Moody’s bank rating methodology here.

WHY THE DOWNGRADE-

#1- You guessed it — the FX crunch, high inflation and rising borrowing costs: The FX crisis, deteriorating fiscal conditions, and high inflation and interest rates will put “significant” pressure on earnings, asset quality and capital buffers, and “may challenge their ability to meet foreign currency liabilities,” Moody’s said.

#2- The government’s debt problem is the bank’s debt problem: All five banks have high exposure to sovereign debt in turn exposing them to the government’s risky credit profile, the rating agency said.

Deja vu:This is the second time this year that Moody’s has taken aim at Egypt and the five banks, downgrading them a notch in February for the first time in a decade following its decision to cut Egypt’s sovereign rating.

Development finance: What’s next?

DFIs have always been important providers of funding. What are their roles — and expectations — moving forward? Egypt has enjoyed big inflows of equity and debt finance from a veritable alphabet soup of development finance institutions, since 2011, with funds serving the private sector at least as much as the government.

We discussed the role of DFIs today as investors and drivers of the private sector and ESG regulations at the Enterprise Finance Forum with Ahmed Sobhy, CIO at Banque Misr, Ahmed El Alfi, founder and chairman Sawari Ventures, and Menna Zekrallah, senior banker manufacturing and services at the European Bank for Reconstruction and Development (EBRD).

A reliable source of FX: “DFIs remain an important part in the funding mix for any project as a source of foreign currency,” said Sobhy. “Today, a lot more of Egypt’s debt is going to multilateral organizations like DFIs versus fully commercial investors.” Yet, their role is changing, said El Alfi. Whereas in the past DFIs have brought in capital and activated local capital with a sense of reassurance, today we don’t require DFI validation for a project to go ahead, as local institutions have the appropriate skill set to evaluate projects and make decisions independent of DFIs.

Breaking molds: “As an institution that’s some hundred-years-old and has been operating in a very strict, rigid way in terms of how it looks at loans, the help that Banque Misr got during those earlier years helped us be ready for the world of sustainable finance,” said Sobhy.

Supporting on-lending: Now Banque Misr also wants to develop its on-lending operations. “Our MSME portfolio is around EGP 50 bn, with 140k borrowers. It’s about finding the USD for imports and that’s where DFIs are stepping up today. We’re coming up with creative structures in terms of how we can extend those on-lending tenors – things like bonuses, introducing more of the grant element to funding so that the customers are wanting to take that lending on more. Obviously high interest rates and lack of USD are hampering this growth a little bit.”

EBRD wants to be a facilitator: “When there are good opportunities, we have to catalyze more investments from the international community, but very much so working with local banks,” said Zekrallah. “We view local banks and commercial banks as our partners and they are a key lever of how we can multiply our mandate and widen our reach in Egypt, whether through credit lines, specifically for women, land businesses, more inclusive youth and employment or a wider reach of MSMEs.”

SME split: “Today our portfolio is split 50% towards mid-size enterprises and 50% towards the smaller enterprises, and within that we have created tailored programs, including a program just for female entrepreneurs called Zaat,” Sobhy added. The bank also operates a digital product, SME Express, which encompasses 45% of its entire portfolio, he added. “If you give clients a digital product, they’ll use it — and it’s reduced our cost of service significantly. It’s an experiment that shows that financial inclusion can work and when you deploy technology at scale, people pick it up.”

Joint ventures can come in handy, as Midar — in which Banque Misr and the National Investment Bank together hold nearly 75% — has done after implementing a new strategy, Sobhy added. “They’ve been able to attract a couple of international investors that are going to come in and do JVs with them, that's the kind of thing you want to see, that kind of discipline. If you see that across the entire portfolio or entire program the results will be much better.”

Driving a global green transition: By 2025, 50% of EBRD’s global annual investments will be green, Zekrallah said, a target that the lender hit last year with EUR 30 bn in investments. The transition starts in policy. “We try to be very close to the design and implementation of green programs to make sure that all stakeholders, not just the government but also corporate associations, are on board, when they design the regulations, so that the programs are implementable, fit for purpose and relevant.”

At home: In Egypt, the EBRD has been working with the government on the draft green hydrogen strategy, by mobilizing consultants, a strategy the lender frequently implements, with 93% of all its co-investment grants and loans between 2018 and 2020 for green projects. The green hydrogen strategy, Zekrallah added, “would unlock further investments from the private sector as well as from international investors.”

ESG is good for business: “Every one of our companies has ESG training and monitoring,” El Alfi said. “That’s one of the things that I credit the DFIs for is setting that standard that we all picked up because it ended up being good for us and good for business. Companies that comply are the ones that perform the best.” Yet climate remains a ‘filter’ not a ‘focus’ for companies in Egypt, he thinks. “I don’t know that the depth of the market is there for climate focused businesses yet but it is definitely a filter that can be applied and trained to all our companies.”

Egypt is on an ESG journey – but not everyone is on the same route: The presence and awareness of ESG has evolved since 2020 from asking if a company has the basic environmental permit to conducting ESG due diligence, said Sobhy, and as a bank, Banque Misr is doing more to ensure ESG standards are upheld. “If someone says I'm going to improve the efficiency of energy efficiency in my factory by installing this, they come and calculate what that looks like and then report on it.”

Getting everyone on board needs more work: “For family owned businesses and businesses that have run for a long time, ESG seems like a distraction,” Sobhy said. “What's important is to be transparent; they need to see a benefit, such as from the structure of financing they get.”

Lacking ESG could equal fewer funds: If companies don’t know what the ESG standards are, it could hinder access to DFI capital, Zekrallah said, agreeing that knowledge about ESG standards and requirements is limited in Egypt. To combat this the EBRD tries to decarbonize certain sectors in a systematic way, designing low carbon pathways (LCP) with stakeholders that evaluate an industry from an ESG point of view. Currently, the lender has completed an LCP for the cement industry and is working on doing the same for ammonia.

Egypt’s green bond market is yet to unlock its full potential: “Green bonds are a very interesting idea,” thinks Sobhy, yet the pricing advantage is lacking. “DFIs are currently the market for Egyptian green bonds and I might as well go and do this directly. It's lower cost, I don’t need to pay for a rating or any of the other things that come with doing a green bond.”

The EBRD is behind green bonds: “It's a bit of a change in the mindset of how corporates behave and think and it comes with a cost, so people tend to think that this is a luxury,” says Zekrallah. Yet one solution could be to widen the access to a pool of investors not currently looking at that particular sector, she suggests. Earlier this year the EBRD anchored the first green bond for Scatec to back its solar plants in Egypt, mobilizing funds from other DFIs and attracting a pool of international investors. The projects could also be subsidized by DFIs, which view green funds as innovative and sustainable linked loans.

High risk, reliable investors: DFIs are willing to provide the funds for projects other investors would steer clear of, thinks El Alfi, they are key for financing big, creative projects in Egypt. Lenders like EBRD are willing to invest in long-term commitments, even in times of volatility, and in calmer times looking to prepare businesses for future bumps in the road, Zekrallah added.

Egypt, US discuss refugees, aid as Gaza siege deepens humanitarian crisis

Egypt has rejected proposals to establish a safe corridor into Sinai for Palestinians fleeing Israel’s bombing campaign in Gaza, Reuters reported yesterday, citing what it says are several Egyptian security sources. US national security advisor Jake Sullivan on Tuesday said that Washington is in talks with Egyptian and Israeli officials about establishing a safe passage for civilians, but declined to go into details.

The humanitarian crisis is deepening: Dozens of Israeli fighter jets continued to bomb Gaza yesterday ahead of what many expect will be an Israeli ground invasion, demolishing entire neighborhoods and striking the Islamic University of Gaza. Israel has placed the densely-populated territory under total siege, cutting off food, water, fuel and aid to the more than 2.2 mn people. Gaza’s only power station shut down yesterday due to the lack of fuel and medical supplies are running low.

In numbers: More than 1k Palestinians have been killed in Gaza during the five days of fighting while the death toll in Israel has risen above 1.2k, according to the latest figures. The bombing has left 5.3k people wounded in Gaza and 180k have been made homeless.

The focus of discussions is on getting aid into Gaza, not on allowing refugees across the border, the Egyptian sources reportedly told Reuters. Egypt has held talks with the US, Qatar and Turkey about delivering humanitarian aid via the Rafah crossing between the Sinai and Gaza under a limited ceasefire, they said. Israeli forces have repeatedly bombed the border crossing this week, and warned Egypt that any aid trucks it sends across the border will be targeted.

Egyptian officials have warned Israel against trying to force Palestinians across the border into Egypt after an IDF spokesperson on Monday encouraged them to use the Rafah crossing between Gaza and the Sinai. In an address on Tuesday, President Abdel Fattah El Sisi said that Egypt’s national security is his “top priority” and that “there will be no compromise or complacency under any circumstances.” Israel’s ambassador to Egypt later retracted the statement.

The Arab League called for a ceasefire and a lifting of the siege “immediately” during an emergency summit in Cairo yesterday. In a statement (pdf). Foreign Minister Sameh Shoukry warned delegates that the “unprecedented” escalation of tensions could be a “dangerous turning point” for the region, emphasizing the need to finally settle the issue of the Israeli occupation.

DIPLOMACY- Axios reports that the UAE has warned Syria not to allow attacks on Israel to be launched from its territory, while Biden yesterday told Tehran to “be careful” about further escalating the conflict with Tel Aviv. A first for Riyadh and Tehran: The leaders of the two countries spoke by phone for the first time normalizing ties in March. Ira nian state med ia says the two discussed the need to “stop war crimes” while the Saudi Press Agency notes that Crown Prince Mohamed bin Salman said the kingdom is trying to halt the escalation.

AND- El Sisi had calls yesterday with UN Secretary General An tonio Guterre s and European Commission President Urs ula von der Ley en, while Shoukry handled outreach to local UN officials.

Egyptian government in negotiations with international lenders for Sixth October-Abu Simbel high-speed rail line loan

We might be getting fresh funding for our second high-speed rail line: The Madbouly government has opened talks with international lenders for a USD 2.1 bn soft loan to help fund the second phase of the 2k-km high-speed rail line between Sixth October and Abu Simbel, reports Asharq Business, citing two unnamed government sources. German development bank KfW and Italian export credit agency SACE were both named by the news outlet as being involved in the discussions.

Who’s going to lay the tracks and run the trains? Siemens Mobility, Orascom Construction, and Arab Contractors were put in charge of designing, installing, commissioning and maintaining the line for 15 years.Deutsche Bahn and Elsewedy Electric will manage and operate the first phase running between Ain Sokhna and Marsa Matrouh.

This is the second leg of a USD 23 bn project that will stretch for some 1.8k km across Egypt, linking Cairo, Aswan, the North Coast and the Red Sea. The Sokhna-Matrouh connection will feature a passenger line able to carry more than 30 mn people a year as well as a freight line that the German conglomerate referred to as a “Suez Canal on tracks.” The passenger trains will travel at up to 250 km/hour, reducing travel time by up to 50%. This is at least double the speed of the current network, which offers speeds of between 90 and 120km/hour.

ALSO CHUGGING ALONG IN ROLLING STOCK NEWS-

International companies are bidding for Alexandria’s metro trains contract: Familiar faces in our railway industry like France’s Alstom, along with south Korea’s Hyundai, Spain’s CAF, Russia’s Transmash, and China’s CRRC have submitted offers to produce 21 trains for Alexandria’s planned metro, reports Asharq Business, citing two unnamed government officials. Offers for the roughly USD 400 mn contract are backed up by soft loans from international development banks, the news outlet added.

An update on Metro Line 6: The National Authority for Tunnels inked an MoU with a consortium led by the French consulting and engineering firm AEGIS to move forward with the second phase of studies for Cairo Metro’s Line 6, the Transport Ministry said in a statement. The studies will go on for an 18-month period as the companies prepare the design, project requirements, technical specifications, and tender documents for the project. The French government is financing this phase of studies with an EUR 8 mn grant.

Metro Line 6? The 27-station, 35-km line will be the first driverless metro in Africa and will link Shubra El Kheima in the north to New Maadi in the south. French rolling stock manufacturer Alstom last November inked a framework agreement to design, build, and maintain the line.

Egyptian talk shows spend another night focused on the Gaza war

It was another night with the conflict in Gaza dominating the airwaves as the conflict entered the end of day six.

The conflict is between a lawless Israeli military and innocent Palestinian civilians, former foreign minister Nabil Fahmy told Yahduth Fi Masr’s Sherif Amer (watch, runtime: 3:13 | 5:32), arguing that it is natural for the Palestinians to grow frustrated and resort to violence. Arab League Assistant Secretary-General Hossam Zaki called on Israel to respect international and humanitarian law and called out western media for its “very fierce” stance against the Palestinains, during a phone-in with Amer (watch, runtime: 4:08).

Fear of the Israel-Hamas conflict spilling over: “No one can be sure that the conflict will stay confined to Gaza,” Zaki told Yahduth Fi Masr (watch, runtime: 1:15). Strategist Samir Farag joined Ala Maso’uleety’s Ahmed Moussa (watch, runtime: 3:10 | 2:29) to warn against the consequences of the Lebanese militant group Hezbollah’s wider intervention in the ongoing conflict. Former assistant foreign minister Mohamed Hegazy reiterated the need to put an end to the violence in Gaza on Al Hayah Al Youm (watch, runtime: 13:58), while Palestinian Red Crescent spokesperson Muhammad Abu Musabih joined Masa’a DMC (watch, runtime: 9:30) to give us the latest on-the-ground updates.

Presidential candidates weigh in on the conflict in Gaza: Candidates have shifted their campaigning from internal public policy to the situation in Gaza seeing as it threatens Egypt’s national security, academic author Mohamed Fathy told Yahduth Fi Masr (watch, runtime: 3:59).

Israel had advanced knowledge of Hamas attack, US lawmaker confirms

Egypt’s response to the conflict in Gaza is leading the conversation internationally this morning: A senior US lawmaker has backed up reports in the press earlier this week that alleged Israel had ignored warnings from Egypt about a planned attack by Hamas. “We know that Egypt has warned the Israelis three days prior that an event like this could happen,” head of the House Foreign Affairs Committee Michael McCaul told reporters yesterday. “A warning was given … I think the question was at what level.”

“Surprised by the indifference”: This comes two days after the Associated Press broke the news that Cairo had warned Tel Aviv. “We have warned them an explosion of the situation is coming, and very soon, and it would be big. But they underestimated such warnings,” the newswire quoted an unnamed Egyptian official as saying. Israeli news outlet Ynet also quoted an Egyptian intelligence source as saying that Egyptian officials had notified Israeli Prime Minister Benjamin Netanyahu of a “terrible operation” but were left “surprised by the indifference” shown. Netanyahu has denied the reports calling them “absolutely false.” (Reuters | AFP | Financial Times | BBC | Times of Israel | The Telegraph)

Egypt seeks USD 150 mn from EBRD before the end of the year. PLUS: News from Pachin, Vezeeta, Contact Financial, Roboost and McDonald’s.

DEBT-

Gov’t wants some of its NWFE finance ASAP: The government is trying to secure a USD 150 mn loan as part of its NWFE program from the European Bank for Reconstruction and Development (EBRD) before the end of the year, Asharq Business reports, citing two unnamed government officials. The money would be used to replace aging gas-fired power stations with renewable energy in a bid to strengthen our power grid and reduce emissions, said one of the sources.

Remember: The European Bank for Reconstruction and Development is the lead partner on the NWFE’s energy pillar, to which it will contribute USD 200-300 mn. The money will be used to decommission 5 GW of gas-fired power plants by 2025 and establish 10 GW of solar and wind projects by 2028. The pillar is expected to mobilize USD 10 bn of private-sector investment and USD 500 mn of soft loans, grants and assistance from donors and international financial institutions.

CAPITAL MARKETS-

#1- Pachin’s going private: Dubai-based National Paints Holding is moving forward with its plans to take Paint and Chemical Industries (Pachin) private following its takeover of the formerly state-owned firm earlier this year. The company has submitted a request to the EGX to delist all 24 mn of its shares from the exchange, the bourse said yesterday. This comes less than a month after Pachin’s board of directors approved plans to buy back the shares from minority shareholders for EGP 39.80. The Emirati company acquired more than 80% of the formerly state-owned company in a mandatory tender offer in May.

LOGISTICS-

McDonald’s is lovin’ optimized deliveries: Mansour-owned McDonald’s Egypt will partner with AI home delivery solutions provider Roboost, the startup said (pdf) last week. The company will automate McDonald’s delivery cycle, optimize operations before delivery starts, and reduce manual actions to increase fleet efficiency, it said.

Roboost might have already knocked on your door: The homegrown delivery solutions startup claims to have completed 4 mn orders since being established in 2020 and employ 2.1k delivery workers, according to the company’s website. Roboost currently provides their services to Cinnabon, Burger King, Al Abd, Koshari Abu Tarek, and other prominent local and international chains operating in the country.

NBFS-

Contact x KashNow: Customers of digital payment platform KashNow will be able to access installment plans offered by Contact Financial’s consumer finance arm Contact CrediTech under an agreement between the two companies, Contact said (pdf) yesterday.

MINING-

SMW Gold just lost one of its two concessions: The Egyptian Mineral Resources Authority (EMRA) has withdrawn the Umm Balad gold mine concession from SMW Gold on the back of the company’s alleged failure to stick to its development and investment plan. Asharq Business broke the news, citing two unnamed government sources.

FYI- SMW, a subsidiary of Australian miner Allied Gold, is exclusively focused on Egypt and was handed a license for the Umm Balad and Al Fawakhir concessions in the Eastern Desert in 2007. The concessions were the subject of a drawn-out arbitration case that SMW Gold filed against the Egyptian government in 2013.

ADES shares soar 30% in market debut, bucking regional market trends

Shares of regional oil and gas giant ADES Holding leapt 30% in their first day of trading on the Tadawul yesterday, closing the day at SAR 17.54. The IPO of the Public Investment Fund-backed company had been heavily oversubscribed, with the institutional tranche seeing nearly 10x more demand than there were shares on offer.

Who sold: Shareholders including PIF, ADES Investments Holdings, and Zamil Group Investment together sold a total of 101.6 mn existing shares, and ADES issued 237.1 mn new shares as part of the transaction, according to Reuters.

Where’s the money going? ADES intends to use the proceeds from the offering to pay down debt, fund its growth strategy, as well as for “general corporate purposes,” Bloomberg reports.

Advisors: Our friends at EFG Hermes acted as joint financial advisor, global coordinator, bookrunner, and underwriter on the offering, according to an EFG Hermes press release (pdf) released yesterday.

Ades started life here in Egypt, where it maintains a significant presence. It derived 18% of its revenue locally in 2019 (ahead of a sustained push to expand its regional operations), according to a 2020 investor presentation (pdf). It is currently the country’s largest offshore driller. The company has also been reported as saying it could look into a dual listing on the Egyptian Exchange after its Saudi debut.

Another rate hike in the Fed’s future? Most Federal Reserve officials see “one more increase in the target federal funds rate at a future meeting” as appropriate, according to the meeting minutes (pdf) released yesterday. Members of the Fed Open Market Committee agreed to “proceed carefully” on future decisions and base their decisions on incoming information and its implications. The bank left interest rates unchanged during its September meeting, but hinted that policy will remain tight to fight soaring inflation and bring it down to the target 2%.

ALSO WORTH NOTING-

Arab Bank becomes first Jordanian lender to sell sustainable AT1 bonds:Amman-based Arab Bank has closed a USD 250 mn issuance of sustainable Additional Tier 1 (AT1) bonds, becoming the first lender in the country to sell the contingent-convertible bonds. The London-listed bonds were sold at an 8% interest rate, and attracted strong demand from investors. (Arab Bank statement , pdf)
Exxon on the verge of one of the year’s biggest acquisitions: US oil giant Exxon Mobil is close to finalizing an agreement to buy US shale producer Pioneer Natural Resources for nearly USD 58 bn in an all-stock deal. The acquisition would be Exxon's largest since its USD 81 bn takeover of Mobil in 1998, and the second-largest this year behind Broadcom’s USD 69 bn purchase of VMware. (Bloomberg)

EGX30	19,653	-0.4% (YTD: +34.6%)
USD (CBE)	Buy 30.83	Sell 30.95
USD at CIB	Buy 30.85	Sell 30.95
Interest rates CBE	19.25% deposit	20.25% lending
Tadawul	10,573	-0.6% (YTD: +0.9%)
ADX	9,647	+0.4% (YTD: -5.5%)
DFM	4,082	+0.8% (YTD: +22.4%)
S&P 500	4,377	+0.4% (YTD: +14.0%)
FTSE 100	7,620	-0.1% (YTD: +2.3%)
Euro Stoxx 50	4,201	-0.1% (YTD: +10.8%)
Brent crude	USD 85.67	-2.3%
Natural gas (Nymex)	USD 3.39	+0.4%
Gold	USD 1,887.40	+0.7%
BTC	USD 26,705	-2.6% (YTD: +61.7%)

THE CLOSING BELL-

The EGX30 fell 0.4% at yesterday’s close on turnover of EGP 2.1 bn (3.3% below the 90-day average). Regional investors were net buyers. The index is up 34.6% YTD.

In the green: Ezz Steel (+8.7%), B Investments Holding (+8.0%) and Mopco (+3.9%).

In the red: Alexandria Mineral Oils Company (-3.7%), Belton Financial Holding (-3.1%) and Orascom Development Egypt (-2.5%).

My Morning Routine: Dr Wael Habib

Meet our friend Wael Habib, MD, DC: Each week, My Morning Routine looks at how a successful member of the community starts their day — and then throws in a couple of random business questions just for fun. Speaking with us this week is Wael Habib (LinkedIn | website), who runs a unique spine and sports medicine practice in the Cairo suburb of Maadi and who is a member of both the American Chiropractic Association and the North American Spine Society.

We have a bias when it comes to Habib: He’s the reason our editor-in-chief can now raise his arm above his shoulder — and walk without debilitating knee pain. Habib brings a unique skillset to his practice as both a classically-trained MD and as a chiropractor, but ask him how he sees himself, and he’ll simply tell you he’s “a clinician who uses whatever works.” Edited excerpts from our conversation:

I’m a spine and sports medicine specialist — that’s my passion and the speciality for which I’m best known now, though I came up in trauma and emergency medicine. I graduated from the surgery and internal medicine program at Ain Shams School of Medicine and then trained in traumatology in the United States before enrolling at the National University of Health Sciences in Illinois. As a trauma specialist, I was privileged to work on everything from major incidents to planning emergency medical services for visits to Egypt by world leaders — including the US and French presidents — as well as for peace summits, the World Economic Forum, and meetings of the G15 in Sharm El Sheikh.

As I explained in my TED Talk (watch, runtime: 12:40) [smiles], I changed fields because I wanted to look at patients in total — to take a more holistic approach. I was an emergency room physician, and it was exactly the sort of intense job you want as a young MD. I thought I could handle anything, fix everything: We treated gunshot wounds, stabbings, near-downing accidents, heart attacks. You intervene, you make an immediate difference, and the patient moves on.

But over time, I found myself realizing there were many people in the ER that I couldn’t help. People with debilitating chronic illnesses that no doctor ever seemed to be able to cure. Things I considered at the time “trivial,” but conditions that altered the course of people’s lives — people who couldn’t enjoy life or excel in a job because of chronic, debilitating pain.

That’s when I started to hear about this new speciality called “chiropractic” and started on a path that today, as a spine and sports medicine practitioner, gives me great joy because I can make such a clear difference in my patients’ lives. I’m convinced much of the world has it wrong when it comes to healthcare: chiropractic and osteopathic medicine need to be seen as the mainstream, while allopathic medicine — medications and surgery — should be the “alternative.”

My morning routine is a bit unusual. I kick myself out of bed at 3am every workday. It's not that I like it, it’s a deliberate act. I try right away to get into my workout clothing before I change my mind. I’ve been very diligent for maybe the past 15 years about my workout routine, which is half high-repetition work with light weights to build strength endurance, and then half cardio.

Afterward, I sit down to have a double espresso and I get 45 minutes to an hour alone when the night predators are going to bed and the birds are still sleeping. I love the alone time. I’ve trained myself to spend the first minute or two of that time simply not thinking. Then I take out a fountain pen, my notebook, my organizer, and I get to think and daydream. I just let thoughts float into my head and basically write my resume going forward: What should I do with a specific project? Or a patient? With my clinic or my sport? Mind maps are a big thing for me at this time of day.

Other people are part of the noise I try to cut out. You can’t live your life according to the opinions of others. “You can’t study this. That’s not a career. You should do it this way, not that. What’s the point of this hobby?” And you know what? Most of the time they’re wrong — in life and in work. You need to learn to listen to yourself.

I don’t actually read Enterprise in the morning, but I read Enterprise every day, on my way back home or first thing when I walk in the door.

We usually leave the house by 6am and head to the clinic in Maadi so that I’m in the office before 6:30am. We have early appointments, but I’ll spend the first half hour of the workday going through the files of patients that I'm expecting that day or refreshing myself on new patients. I put on some music for the day, I turn on our machines. It’s about igniting my passion for what I’ll spend the rest of the day doing.

I treat people, not spines or ligaments or tendons. It’s important for me to get to know my patients as people. My work is about making a connection: If I can connect to my patents’ fears, their hopes, their frustrations, I can help them move in the right direction with their health.

Good diagnostics and a tailor-made approach are the keys to delivering a success story when you’re setting out to improve someone’s health. And that’s what really floats my boat. It’s not about sterile medicine.

I don’t have assistants. I don’t delegate to a technician or a physio. I do everything myself and I keep it this way. It doesn't matter how long I spend with every patient as long as we get results and respect every patient’s time. I have no interest in building a big, multi-person practice.

One of the most interesting things I’ve watched recently was Return to Space,about Space X. It really drives home what you can do when you take calculated risks. And, of course, Seinfeld. I’ve watched the whole series straight through seven times now. I always pick up on something that I didn’t catch the last time around.

I stay organized because of my wife. She’s Swiss and the boss, my practice manager, everything. I’m totally lost without her. She looks after the business so I can look after patients. She’s the ultimate organizer, and if I can say I’m even slightly better organized at this stage of life, it’s because of her. Without her, I’d be in La La Land.

I love golf and photography in my spare time — they’re my absolute pleasures, especially golf. It’s the perfect way to be outdoors and enjoy greenery here in Cairo. And it’s a great challenge, this silly little white ball.

The best advice I’ve been given applies to everything — to medicine, to business and to life: “Be flexible. Only fools don’t change their minds.” Be flexible and rewrite your future. If you're not happy with what you're doing, then what are you doing? You're wasting your life and time.

CALENDAR

OCTOBER

9-15 October (Monday - Sunday): The World Bank and IMF annual meetings in Marrakech, Morocco.

10-12 October (Tuesday-Thursday) Ceramica Expo, Cairo International Convention Center.

12 October (Thursday): Egyptian-Italian Business Forum.

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

Late October-14 November: 3Q2023 earnings season.

15 October (Sunday): House to reconvene.

15-17 October (Sunday-Tuesday): Egypt Automotive Aftermarket Exhibition, Cairo International Convention Center.

20 October (Friday): S&P Global Ratings to review Egypt’s sovereign credit rating.

20 October (Friday): Deadline for applying for Dar Venture’s Dare incubator.

26 October (Thursday): Daylight saving time ends.

27 October (Friday): Deadline for bidding in tender for five solar plants on north coast.

29-31 October (Sunday-Tuesday): Egypt Energy, Egypt International Exhibition Center.

29 October - 2 November (Sunday- Thursday): Cairo Water Week.

30-31 October (Monday-Tuesday): Intelligent Cities Exhibition and Conference, Dusit Thani LakeView, Cairo.

30-31 October (Monday-Tuesday): Global Business School Network (GBSN), American University of Cairo.

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

Signposted to happen some time in October:

Deadline for ins. providers to link their databases with the FRA
Egyptian-Jordanian Business Council, Amman, Jordan
Gov’t expects to finalize sale of Gabal El Zeit wind plant
October or November: Gov’t expects to finalize stake sale for military-owned fuel retailer Wataniya
Saudi and Egyptian officials will meet to follow up on the project to connect the national power grids of Egypt and Saudi Arabia

NOVEMBER

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

3 November (Friday): Fitch to review Egypt’s sovereign credit rating.

8 November (Wednesday): Turkish-Arab Economic Forum 2023, Istanbul.

9-15 November (Thursday-Wednesday): Intra-African Trade Fair, Cairo.

14-15 November (Tuesday-Wednesday): Destination Africa, Royal Maxim Palace Kempinski Hotel.

14-15 November (Tuesday-Wednesday): Egypt VC Summit, Conrad Hotel.

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

19-22 November (Sunday-Wednesday): Cairo ICT, Egypt International Exhibition Center.

22 November (Wednesday): Deadline to apply to FRA for credit rating license.

23 November (Thursday): Worldview Education Fair, Cairo. (Register here)

30 November-12 December (Thursday-Tuesday): COP28, Dubai.

November: Bidding deadline for 5 gold mine concessions in the Eastern Desert (TBC).

DECEMBER

1-3 December (Friday-Sunday): Egyptian expats vote in the presidential election.

4-7 December (Monday-Thursday): Egypt Defence Expo, Egypt International Exhibition Center.

9-15 December (Saturday-Friday) :The Engineering Export Council of Egypt’strade mission to Saudi Arabia.

10-11 December (Sunday-Monday): eGlobe Expo, St. Regis Almasa Hotel, Cairo.

10-12 December (Sunday-Tuesday): Voting in presidential election takes place in Egypt.

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

12-14 December (Tuesday-Thursday): Food Africa Expo, Egypt International Exhibition Center.

20 December (Wednesday): End of sugar export ban.

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

Signposted to happen sometime in December:

Gov’t expects to finalize sale of a stake in military-owned bottled drinks company Safi
Gov’t expects to finalize sale of Zafarana wind farm

EVENTS WITH NO SET DATE

2023: The inauguration of the Grand Egyptian Museum.

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.

3Q 2023: E-Finance to launch in Saudi Arabia.

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

4Q 2023: EGX to launch a shariah-compliant index.

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

2024: Standard Chartered Bank to open a branch in Egypt.

25 February 2024 (Sunday): Deadline for bidders for oil and gas expansion in the 23 new regions.

Q1 2024: Opening of the new developed Pyramids Plateau in Giza.

June 2024: Gov’t expects to finalize sale of Beni Suef combined-cycle power plant.

1H 2024: Gov’t expects to finalize sale of four water desalination plants.

2H 2024: Gov’t to launch the Cairo Ring Road BRT buses.

End of 2024: The launch of the high-speed train line linking Ain Sokhna with Al Alamein City.

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

2Q 2025: Safaga Terminal 2 to start operations.

2024

JANUARY

7 January (Sunday): Coptic Christmas.

25 January (Thursday): Revolution day.

APRIL

6 April (Saturday): Coptic Easter.

9 April (Tuesday): Eid El Fitr (TBC).

25 April (Thursday): National holiday in observance of Sinai Liberation Day (TBC).

MAY

1 May (Wednesday): National holiday in observance of Labor Day (TBC).

6 May (Monday): Sham El Nessim (TBC).

JUNE

15-19 June (Saturday-Wednesday): Eid El Adha (TBC).

30 June (Sunday): June 30 Revolution Day (TBC)..

JULY

7 July (Sunday): National holiday in observance of Islamic New Year (TBC).

23 July (Tuesday): Revolution Day (TBC).

SEPTEMBER

2-5 September (Monday-Thursday): Egypt International Airshow, El Alamein International Airport.

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

OCTOBER

6 October (Sunday): Armed Forces Day.

Sections

About

Privacy & Support

Get EnterpriseAM daily