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Tuesday, 10 Feb 2026

What We’re Tracking Today
The Big Story Today
Poll
A Message From Auc Onsi Sawiris School Of Business Executive Education
Economy
Also On Our Radar
Planet Finance
Going Green
Calendar

Cabinet holds the line on power prices to fuel deeper interest rate cuts

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Today at a glance

1

BIG STORY TODAY

Egypt will keep electricity prices frozen through June to give the CBE more room for aggressive interest rate cuts.
2

WHAT WE’RE TRACKING TODAY

A new cabinet by lunch?
3

POLL

Analysts polled by EnterpriseAM see a clear path for the CBE to accelerate rate cuts.
4

ECONOMY

Allianz Trade upgrades country risk, citing the liquidity crisis end despite ongoing business-as-usual risks
5

ALSO ON OUR RADAR

Sokhna is getting high-rises and superyachts.
6

PLANET FINANCE

Global investors are increasingly wagering on firms, not flags.
7

Going Green

The desert is done waiting for the grid with off-grid green push.

Tuesday, 10 Feb 2026

What We’re Tracking Today
The Big Story Today
Poll
A Message From Auc Onsi Sawiris School Of Business Executive Education
Economy
Also On Our Radar
Planet Finance
Going Green
Calendar
1

WHAT WE’RE TRACKING TODAY

A new cabinet by lunch?

Good morning folks. We’re waking up to a morning defined by two major pivots: one in the halls of power and another in the central bank’s playbook. By lunch today, we expect a new ministerial lineup to be greenlit by the House, signaling a fresh phase of execution for the Madbouly government.

While the faces at the top may change, the economic mandate remains ironclad: keep the reform path steady to reassure global markets. This political stability is being mirrored by a strategic freeze on electricity prices through June — a calculated move to suppress inflation and clear the runway for the Central Bank of Egypt to potentially accelerate its interest rate cutting cycle as early as this Thursday.

And speaking of interest rates, we’ve got a poll of the analysts we trust the most in today’s issue to give us their forecasts and the reasons behind them. We’ve also got news of Allianz Trade upgrading our country risk profile, Sokhna getting high-rises and superyachts, a look into why the desert is done waiting for the grid with off-grid green push in today’s Going Green, and much, much more.

BUT FIRST- We couldn’t be happier this morning to mark episode #100 of Morning Drive, our essential 10-minute audio edition of EnterpriseAM, brought to you in association with our friends at Madine Masr, Granite, and Bonyan. There’s little we enjoy more than running into fans of Morning Drive in the wild — at events, at the club, in the gym. On behalf of our wonderful Audio team and, of course, Synthetic Salma: Thank you all for listening.

***

WISH THIS MORNING’S ISSUE was a podcast? We’ve got you. Tap or click here to listen to Morning Drive, a 10-minute version of today’s issue crafted for you to enjoy with your morning coffee, while getting the kids ready for school, or while hiding in the bathroom from your kids in search of just five minutes of peace.
***

Happening today

We’re on the lookout for the announcement of an “extensive” cabinet shuffle set to be greenlit by the House in just a few hours, when the lower body meets at 1pm for a plenary session to “consider an important matter” called by Secretary-General Ahmed Manaa. Once the House approves the changes, the new ministers will be sworn in at Ittihadiya, which should give us the full rundown of the cabinet’s new ministerial makeup.

Big changes are coming, but Prime Minister Moustafa Madbouly and the cabinet economic team need not worry, we were told. By keeping the economic team intact, the government is likely signaling to the IMF and global markets that the current reform path is fixed. Consistency in the finance and investment portfolios is a defensive play against market volatility, as any reshuffle now would have risked spooking creditors just as the government pushes for more private-sector buy-in.

Gourmet will officially make its trading debut on the bourse today, with trading in the premium food retailer’s shares set to begin under the ticker GOUR.CA at EGP 6.90 per share, according to a bulletin from the bourse seen by EnterpriseAM.

The listing follows the company selling a 47.6% stake in an IPO, whose public tranche was 55.8x oversubscribed and private placement 12.2x covered. The company raised approximately EGP 1.3 bn in proceeds.

The business community and policymakers will have their eyes on January’s inflation figures due later today for early clues on how the Central Bank of Egypt will act at its monetary policy meeting just two days later.

The country’s last monthly reading showed annual headline urban inflation unchanged at 12.3% despite food and beverages price increases, emboldening forecasts that inflation is set to continue making decent progress toward the CBE’s target of 7% (±2%) by the end of 2026.

The polls are in, with headline urban inflation expected to ease 0.6 percentage points to 11.7% y-o-y in January, driven by a favorable base effect, softer food prices, and a stronger EGP, according to a Reuters poll of 18 analysts. Core inflation is also seen edging down 0.3 percentage points to 11.5%, according to a separate poll of five analysts by the newswire.

Happening tomorrow

Gitex Global’s AI Everything Middle East & Africa summit kicks off tomorrow at the Egypt International Exhibition Center. The two-day event will bring together startups, investors, and policymakers from more than 60 countries to explore investments and innovation in the AI sector. It will feature a ministerial AI policy summit, exhibitions, panel discussions, networking sessions, and a hackathon.

Watch this space

TAX — The Finance Ministry launched a first-of-its-kind digital system to centralize and monitor administrative seizures on taxpayers’ bank accounts and assets, a senior government source tells EnterpriseAM. The system, which begins its rollout in Cairo tax offices this month, is designed to strip local tax officers of the ability to unilaterally freeze company assets — a long-standing grievance for the private sector.

For claims over EGP 1 mn, local tax offices are now prohibited from taking action. These cases are automatically referred to the head of the Egyptian Tax Authority for a final decision. Meanwhile, claims under EGP 1 mn will be managed by the General Administration for Collections, which has a strict 10-day window to verify the judicial grounds for any seizure via the digital platform before any action can be taken.

Why it matters: The threat of an arbitrary seizure has been a key driver of investment risk in Egypt. By centralizing the kill switch, the ministry is effectively defanging lower-level bureaucracy and providing the private sector with added protection. The approach aims to both protect the investment climate and ensure the collection of state dues, our source tells us.

What’s next? After the Cairo pilot, the system will be rolled out nationwide.

INVESTMENT — F6 Ventures plans to kick off a USD 20 mn investment drive targeting local startups in 2Q 2026, Investment Manager Cherif Hamdy tells EnterpriseAM. The capital — part of the USD 50 mn Africa Seed Fund — will be deployed across 38 Egyptian startups over the next five years.

Startups working in fintech, healthtech, logistics, climate, ICT, and edtech will be the fund’s main targets, with average funding between USD 200k-500k and follow-on funding of USD 500k. But “the fund itself will be sector-agnostic, meaning we can invest in other good [prospects], but the sweet spot will be these six,” Hamdy tells us.

ENERGY — EgyptAir got its hands on its first Airbus A350-900 aircraft, which operates using a blend of sustainable aviation fuel (SAF). This move brings EgyptAir closer to its long-term goal of net-zero aviation and comes as part of an agreement with Airbus for the flag carrier to obtain 16 A350-900 jets.

Demand for SAF in Egypt is on the upswing, with EgyptAir’s SAF targets a key driver of demand. The national flag carrier targeted a 2% share of SAF in its fuel mix last year.

The roundup of news and trends that move your markets and shape corporate agendas delivered straight to your inbox.

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** DID YOU KNOW that we cover Saudi Arabia, the UAE and the MENA-IndiaCorridor?

Data point

30 — that’s the number of companies that applied for the new Startup ID on the heels of the Egypt Startup Charter launch, according to a statement from the Ministerial Group for Entrepreneurship.

The application surge signals a strong appetite for Egypt’s first framework to distinguish high-growth ventures from traditional SMEs — a designation that unlocks access to the initiative’s USD 1 bn unified financing and simplified tax regime.

PSA-

WEATHER- It’s a little cooler in Cairo today, with a high of 25°C and a low of 23°C, according to our favorite weather app.

It’s a couple of degrees cooler still in Alexandria, with a high of 23°C and a low of 14°C.

The big story abroad

No single story is capturing the attention of the foreign business pages this morning — among the few worth noting:

Google’s parent company Alphabet started shopping around a 100-year bond, which comes as part of a wider GBP-denominated issuance. We know the demand is there, with the tech giant wrapping up a 5x oversubscribed, USD 20 bn bond sale yesterday. It is also preparing a separate CHF offering, all in a bid to finance its AI ambitions.

Speaking of Big Tech, they might catch a break on tariffs, as US President Donald Trump plansto exempt companies like Amazon, Google, and Microsoft from an upcoming streak of levies on chips. The move would spare imports from Taiwanese chip manufacturer TSMC, whose major clients include AI hyperscalers — a sector that Trump wants to protect while simultaneously remaining tough on imports.

The specter of AI haunts private credit: Private credit lenders remain rattled by potential disruption in the software sector — a favorite debtor among players — by advancements in AI. In light of Anthropic’s rollout of AI tools that automate tasks conventionally done via software products, shares of asset managers with large private credit activity saw a sharp drop.

*** It’s Going Green day — your weekly briefing of all things green in Egypt: EnterpriseAM’s green economy vertical focuses each Tuesday on the business of renewable energy and sustainable practices in Egypt, everything from solar and wind energy through to water, waste management, sustainable building practices, and how you can make your business greener, whatever the sector.

In today’s issue: We take a look at how private players are moving faster than public infrastructure to power the desert with a move into off-grid renewables.

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A year defined by ambition, energy, and global connection.

From elite performance to community-driven experiences, we continue to shape environments where sport goes beyond competition. Creating moments that inspire, connect, and endure at Somabay.

2

The Big Story Today

Cabinet holds the line on power prices to fuel deeper interest rate cuts

Consumers likely won’t see a hike in electricity bills until at least the end of the fiscal year in June, a senior government source tells EnterpriseAM. While the Electricity Ministry has finalized several scenarios for tariff increases based on rising operational burdens, the cabinet is opting to hold rates steady to keep a lid on inflation, our source tells us.

Why it matters: By keeping energy costs flat, and in turn making sure inflationary pressures are kept in check, the Central Bank of Egypt is given more breathing room and confidence to continue its monetary easing cycle from an aggressive standpoint. For the state, savings from lower domestic debt servicing likely outweigh the EGP 75 bn price tag for this fiscal year’s electricity subsidies — up from just EGP 2.5 bn the year before.

Any increase in electricity tariffs is now expected to be delayed until the final quarter of the current fiscal year, or more likely implemented at the start of the new budget cycle in July, our source tells us. Tariffs have been frozen since the last adjustment in August 2024.

As for the complete eradication of electricity subsidies? That will likely only happen after FY 2029-30, we’re told.

The expected decision comes after 2025 became the most fuel-consuming year for the electricity sector, up 40% over the 12 months despite some 2 GW of renewable capacity being added to the grid, our source tells us. Increasing fuel use to power electricity generation was simply a reaction to an uptick in demand, which continued to pile up the electricity sector’s dues to the Egyptian General Petroleum Corp. (EGPC).

Don’t expect a fight with the Fund just yet. A source familiar with the IMF negotiations tells us the Fund is increasingly focused on the social impact of reforms. As long as the EGPC can manage its USD obligations to foreign partners, the Fund appears willing to let Cairo move the goalposts on electricity subsidies to protect consumers and support more aggressive interest rate cuts.

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3

POLL

Analysts polled by EnterpriseAM see a clear path for CBE to accelerate rate cuts

The Central Bank of Egypt will enter its Monetary Policy Committee meeting on Thursday from a position of strength. After many of the committee’s previous meetings were met with caution on the back of persistent inflation concerns, the consensus among 11 analysts and economists polled by EnterpriseAM is clear: the country is ready to continue, if not accelerate, its easing cycle.

Expect a cut of 100-200 bps. Of the analysts we surveyed, nine are calling for an immediate reduction in the overnight deposit rate. Projections range from a cautious 100 bps to a more aggressive 200 bps move, which would bring the deposit rate down from its current 21.00%.

Many of those we spoke to believe the CBE has successfully moved past the crisis management phase. EG Bank board member Mohamed Abdel Aal argues the CBE is now operating from a “position of strength,” noting that the IMF agreement and ample USD liquidity “end the era of defending the currency with high interest rates.” He expects a 150 bps cut, aligning Egypt with a global easing cycle led by the US Fed to “maintain competitiveness and ease the burden on the macroeconomy.”

Some analysts believe the disinflationary trend — if confirmed in today’s January inflation data release — and EGP stability could lead to a front-loaded cut of 200 bps. Ahly Pharos Head of Research Hany Genena expects a 200 bps cut if conditions remain stable. “God willing, we will see January inflation figures around 11.5%, and the recommended cut will be 200 bps,” he said. Former Banque Misr vice chairman Sahar Al Damati is also forecasting a 200 bps reduction, citing a “significant improvement in macro indicators” and a strengthening EGP that she believes “could reach around 45-46 per USD.”

HC Securities’ Heba Mounir points out that even with a 150-200 bps cut, Egypt’s real interest rate remains deeply positive — approaching 9% when adjusted for 12-month forward inflation. As inflation falls faster than nominal interest rates, the real return for a hedge fund or asset manager actually improves even as the CBE cuts. This gives the committee a massive window to lower rates without risking a disorderly exit of foreign portfolio investment.

Beltone Holding’s Ahmed Hafez anticipates a 100-150 bps cut but warns that timing is “always tricky” due to uncertainty around upcoming administered price adjustments for electricity and tobacco.

The lone voice for a hold was Thndrs’ Esraa Ahmed, suggesting the CBE may “prefer to study the impact of previous cuts” and the behavior of savers as high-yield certificates mature. She also pointed to seasonal Ramadan pressures and global oil volatility as reasons for caution. London-based economist Ali Metwally expects a gradual path, suggesting a total of 100 bps of cuts over the entire first quarter, rather than a large front-loaded move.

While the mood is dovish, analysts aren’t ignoring the headwinds. Economist Hany Abou El Fotouh warns of the risk of “hot money” outflows and a dip in the attractiveness of EGP deposits if rates fall too quickly. Genena also notes that his forecast assumes no sudden geopolitical shocks, “meaning no sudden tensions in Iran, no missiles fired here or there.”

With positive real interest rates now firmly in place, policy focus is shifting toward supporting growth and easing the heavy burden of government debt servicing. Analysts broadly expect cumulative rate cuts of at least 600 bps in 2026, with some projections reaching 800 bps over the medium term. Hafez sees a clear path to a 700 bps reduction this year despite near-term noise from the timing of electricity and tobacco price adjustments. Genena has similarly flagged scope for 600-800 bps of cuts, while Abou El Fotouh expects a more measured 300-400 bps reduction over the next six months to support growth without reigniting inflationary pressures.

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4

A MESSAGE FROM AUC ONSI SAWIRIS SCHOOL OF BUSINESS EXECUTIVE EDUCATION

When leadership becomes public infrastructure

Periods of national transformation reveal a simple reality: policies are only as effective as the institutions and leaders responsible for implementing them. In Egypt’s journey toward Vision 2030, the central challenge is less about intent and more about execution within a complex public and judicial landscape.

This challenge informs the work of AUC Onsi Sawiris School of Business Executive Education (ExecEd), through the Leading Change in Dynamic Organizations program, a flagship initiative developed as a follow-up to the success of the Leadership for Government Excellence (LGE) program. Delivered in collaboration with AUC School of Global Affairs and Public Policy (GAPP), the National Institute for Governance and Sustainable Development (NIGSD), and the Ministry of Planning, Economic Development, and International Cooperation, the program is designed to strengthen leadership capacity across Egypt’s public and judicial institutions in line with national reform priorities.

Leading Change in Dynamic Organizations approaches leadership not as a function of hierarchy, but as an institutional capability. The program focuses on enabling leaders to operate across organizational boundaries, manage complexity, and translate policy intent into sustained institutional delivery in dynamic public-sector environments.

The judicial sector emerged as a critical focus area. As Judge Haitham Mohamed Bahaa, an Economic Court Head and Manager of the Judicial Governance Project at NIGSD, explains, the program was designed to “make participating judges think outside of their traditional role and adopt a management mindset to be able to effectively lead teams.” He points to a structural reality within the system itself: “The judicial system functions with institutional autonomy, leaving leadership capacity as a core determinant of institutional quality.”

The most recent cohort was composed exclusively of participants from judicial entities, selected through a competitive process. For many, the experience reframed how leadership was practiced. Judge Yasmin El Isslambouli, Member of the Public Relations Office at the Administrative Prosecution Authority (APA), notes that the program “went beyond theory, and helped clarify what effective leadership looks like in practice,” noting its impact on how she manages complex situations with clarity and composure.

The program also addressed long-standing resistance to change. Judge Yasser Abdel Shakour Mostafa, Vice President at the Court of Cassation, emphasized that “change is constant” and that reform must be implemented “consistently and logically, not by emotional whims or else it will not be effective.” Others highlighted the focus on influence without authority.

As Egypt continues its reform journey, leadership development functions as more than training. It is one of the less visible, yet essential, systems through which institutional progress becomes possible.

To learn more about how ExecEd is supporting leadership capacity across Egypt’s public institutions, click here.

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5

ECONOMY

The liquidity crisis is over, but business-as-usual risks remain high

Allianz Trade upgraded Egypt’s short-term country risk rating to D3 in its 2025 Country Risk Atlas (pdf), reversing a downgrade to D4 in the previous year’s report (pdf) triggered by 2024’s liquidity crunch. The move signals a “partial recovery in financing conditions” and reflects a significant stabilization in the trade credit ins. company’s measure of the immediate risk of non-payment in trade receivables.

SOUND SMART- The D component — which stayed put — represents the medium-term risk rating that evaluates the structural health of an economy over the next several years, with the lowest risk at AA and the highest at D. The numerical part is the country’s short-term risk rating, which looks at immediate threats that could cause a financial crisis or payment defaults in 6-12 months, rated from 1 as the lowest to 4 as the highest. Egypt scored a 3 for “sensitive.”

Why it matters: A more favorable D3 rating should persuade some global trade credit insurers to loosen limits on shipments to Egypt that were frozen during pre-float USD shortages. Despite the upgrade, Egypt is still marked as D in the country grade — the highest possible medium-term risk level. The new rating doesn’t compare favorably to our regional peers, with the UAE holding an AA1 rating, KSA an A2 rating, and Morocco a B1 rating.

Social and political unrest are primary concerns for investors, outweighing economic growth prospects, as “risks come before profitability,” former Industrial Development Bank chair Maged Fahmy tells EnterpriseAM. The outlined risks in the report “constitute the largest part of any investor’s decision, and I’m talking here about direct and indirect investments such as hot money,” Fahmy added.

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6

ALSO ON OUR RADAR

Sokhna is getting high-rises and superyachts

Tatweer Misr launches EGP 50 bn Il Monte Galala Towers & Marina in Sokhna

Tatweer Misr is stepping up its wager on Ain Sokhna as a year-round destination with the launch of its EGP 50 bn Il Monte Galala Towers & Marina, according to a cabinet statement. The project, which officially broke ground yesterday, marks a strategic shift for the developer as it moves beyond traditional residential sales into higher-yield, specialized tourism developments.

The details: Designed to maximize the value on the rugged Galala terrain, the project adopts a vertical, skyscraper-led model comprising 10 mixed-use towers with around 2.6k residential and hotel units within a total built-up area of 470k sqm. Construction is set to begin in 2H, with the seven-year master plan built around a smart, sustainable coastal city concept targeting international business travelers and luxury yachting demand.

A trio of global heavyweights will manage the project:

  • Maritime: The US-based IGY Marinas will oversee a 150+ yacht marina;
  • Business tourism: The UK’s BCI Realty will manage the 28k sqm global exhibition and convention center, aimed at positioning Sokhna as a regional business events hub;
  • Infrastructure: France’s Schneider Electric will deliver smart infrastructure and energy management systems, with Orange Egypt providing digital infrastructure.

Pharco sells minority stake in Saudi arm to the UK-based Ashmore

Local pharma player Pharco Pharma sold a minority stake in its Saudi arm to London-based investment manager Ashmore through a primary capital increase, according to a statement (pdf). The transaction marks the inaugural investment under the Ashmore Saudi Industrial Fund and was anchored by the Saudi Investment Company.

ADVISORS- Our friends at EFG Hermes acted as the sole financial advisors on the transaction.

What they said: “This transaction highlights the growing [potential] for deeper integration between Egypt, Saudi Arabia, and the wider region,” Co-Head of Investment Banking at EFG Hermes Maged El Ayouti said.

ALSO- Pharco is opening its first plant in Saudi Arabia by 2027, marking its first industrial foray beyond Egypt, CEO Sherine Helmy told Asharq Business. The first phase of manufacturing in the Kingdom will focus on solid pharma forms, which represent roughly 70% of market demand. The facility plans to later expand production into biological drugs, vaccines, and other specialized treatments, Helmy said.

CIB posts strong 2025 results

EGX30 bellwether CIB closed 2025 with EGP 82.2 bn in net income, up 49% y-o-y. The bank’s release of provisions padded the bottom line on what was already a very good year for the private-sector stalwart. CIB released provisions after recalibrating its expected credit loss model. Strip out the provisions it released, and net income was still up a healthy 28% — CBE rules mean that the extra cash doesn’t count toward CIB’s capital base or as distributable earnings.

For 4Q, net income was up 57% y-o-y to EGP 20.1 bn, the bank said in its earnings release(pdf). Revenues came in at EGP 33.7 bn for the quarter, up 25% y-o-y.

The margin performance is perhaps most impressive: CIB held its net interest margin — NIM, in industry-speak — at 8.95%, a compression of just 53 bps despite 725 bps in policy rate cuts throughout the year. The bank biased its deposit mix toward less-expensive (for the bank) current and savings account deposits, which stood at 61%, up from 56%. Total deposits were up 14% y-o-y at EGP 1.1 tn at year-end.

Loan growth was strong: Gross loans were up 44% to EGP 576 bn, with local currency lending up 56%. Loans to corporations grew 45%. The interesting signal here: 55% of borrowing was to support capex — suggesting some companies are investing in growth even at what remain credit-card interest rates.

Other highlights: CIB has applied for a license to operate a digital bank here at home, and its outpost in Kenya turned a before-tax income for the first time since acquisition.

Crédit Agricole’s net income falls 13% y-o-y in 2025

Crédit Agricole Egypt saw its net income fall 13% y-o-y to EGP 6.9 bn in 2025, according to its latest financials (pdf). The decline was largely due to a tough base effect from exceptional FX income booked in 1Q 2024 following the March 2024 float, which inflated last year’s results. With that one-off absent, profitability normalized in 2025 despite solid balance sheet growth. Commercial growth remained strong, with gross loans up 22% y-o-y to EGP 67.5 bn and customer deposits rising 15% to EGP 110.2 bn.

What weighed on earnings: Net banking income fell 5% y-o-y to EGP 13.1 bn, mainly reflecting a sharp 45% drop in other operating income as FX-related gains faded. Net interest income slipped 2% y-o-y amid interest rate cuts and a higher cost of funds, while fees and commissions rose 12% on the back of stronger customer activity.

SPEAKING OF CRÉDIT AGRICOLE- The Central Bank of Egypt hit the lender with a EGP2.1 bn fine on account of its failure to allocate 25% of its total loan and credit facilities portfolio to financing micro, small, and medium enterprises in line with CBE requirements.

Tactful AI raises USD 1 mn in pre-Series A to scale agentic CX

Cairo-born customer experience platform Tactful AI raised USD 1 mn in a pre-Series A round co-led by Foras AI and M Empire, it said in a statement (pdf). The round follows a 100x increase in platform usage over the past year and marks a new independence milestone after the founders bought the company back from European firm Dstny — which had acquired it in 2022. The company aims to raise a Series A within the next 12 months.

Why it matters: Tactful is moving beyond chatbots into agentic AI to autonomously execute back-end tasks like order tracking and CRM updates. For enterprise clients like Elaraby Group, Bosta, and Valu, this shifts AI from a cost center to a revenue driver. The founders’ decision to buy the company back taps into a broader sovereign tech trend in Egypt, where startups are favoring local R&D and strategic control over quick exits. Tactful has already invested USD 5 mn in product development and plans to double that amount over the next three years.

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7

PLANET FINANCE

Global investors are increasingly wagering on firms, not flags

A quiet shift is underway in emerging-market debt. A growing number of corporates are now borrowing in global markets at cheaper rates than their own governments, Bloomberg reports. For investors, that’s a sign that sovereign risk — long the defining constraint on EM credit — is becoming less of a drag for stronger, globally oriented companies.

EM corporates have sold USD-denominated bonds this year at an average yield of around 5.8%, undercutting the roughly 6% investors are demanding from sovereigns with comparable maturities, based on data through early February. This marks a clear reversal from the past two years, when companies paid 7% or more to borrow — above government funding costs — reflecting the long-held assumption that corporations in developing economies are inseparable from sovereign risk.

In some cases, the gap is striking. Ukrainian agribusiness MHP SE has recently raised debt at yields 6.5 percentage points below those on Ukrainian government bonds, even though the country is at war and defaulted in 2022. Investors backed the company because it continued paying its bondholders throughout the crisis — something the government was unable to do.

Why the old rules are bending

In developed markets, it is common for large multinationals to enjoy higher credit ratings and lower borrowing costs than their governments. In EMs, that separation has historically been constrained by the sovereign ceiling — a ratings convention that caps corporate creditworthiness at or below that of the home country. The rationale is that governments control regulation, capital flows, and currency regimes, all of which can overwhelm even healthy corporate balance sheets.

Research from Aberdeen Investments suggests the ceiling is becoming less binding for a subset of issuers, even as many companies still operate close to — or within — the sovereign ceiling. Firms with diversified operations, hard-currency revenues, and conservative leverage are increasingly insulated from domestic fiscal and political stress. In practice, markets are starting to price these firms on fundamentals rather than passports.

Export-focused firms stand out: When local currencies weaken, governments tend to suffer, but exporters often benefit because their costs are domestic while their revenues are in USD. Companies can also respond more quickly to stress by cutting spending or delaying investment, while governments are constrained by politics and social pressures.

Markets are rewarding stronger corporates

So far in 2026, EM corporate debt has slightly outperformed sovereign bonds, with spreads falling below 200 basis points — near their lowest levels since the 2008 global financial crisis — while returns have edged ahead of government-debt indexes. “For those seeking lower volatility investments, emerging-market investment-grade corporates and sovereigns present an appealing spread advantage over US investment-grade corporates,” UBS Asset Management’s Shamaila Khan said.

In its 2026 outlook for EM hard-currency debt, Janus Henderson argues that investors are becoming more selective rather than broadly risk-averse. Instead of trading EMs as a single macro wager, markets are increasingly differentiating between sovereign balance-sheet risk and corporate credit quality — particularly for issuers with strong cashflow visibility and manageable leverage.

The shift is also reflected in the data. EM corporate USD bond yields have held below 6%, down sharply from late-2022 levels, underscoring how far risk premiums have compressed as investors grow more willing to price corporate credit separately from sovereign balance sheets. With elections looming across parts of Latin America and Asia — and fiscal discipline under pressure — some investors see room for corporates to continue outperforming, even as sovereign risk remains a constraint.

Not a full break from sovereign risk — yet

This does not mean EM companies are suddenly immune. The sovereign ceiling still matters, particularly for domestically focused companies exposed to regulation, subsidies, or capital controls. During periods of global stress, sovereign risk tends to reassert itself quickly, pulling corporate spreads wider regardless of fundamentals.

Still, the signs are growing: In parts of the EM universe, investors are beginning to distinguish strong companies from weak states. For those seeking yield without taking on full sovereign risk, the separation is becoming increasingly attractive.

MARKETS THIS MORNING-

It’s another morning with Asia-Pacific markets opening in the green, led by the Nikkei’s rally, as investors react to Japanese Prime Minister Sanae Takaichi’s election victory. US markets, on the other hand, are cooling off, with indices set to open in the red after two days of gains.

EGX30

50,294

+0.5% (YTD: +20.2%)

USD (CBE)

Buy 46.82

Sell 46.96

USD (CIB)

Buy 46.83

Sell 46.93

Interest rates (CBE)

20.00% deposit

21.00% lending

Tadawul

11,195

-0.2% (YTD: +6.7%)

ADX

10,629

+0.6% (YTD: +6.4%)

DFM

6,774

+1.3% (YTD: +12.0%)

S&P 500

6,965

+0.5% (YTD: +1.7%)

FTSE 100

10,386

+0.2% (YTD: +4.6%)

Euro Stoxx 50

6,059

+1.0% (YTD: +4.6%)

Brent crude

USD 69.18

+1.7%

Natural gas (Nymex)

USD 3.14

-8.3%

Gold

USD 5,079

+2.0%

BTC

USD 70,375

-1.0% (YTD: -19.7%)

S&P Egypt Sovereign Bond Index

1,017

+0.1% (YTD: +2.4%)

S&P MENA Bond & Sukuk

151.93

0.0% (YTD: 0.0%)

VIX (Volatility Index)

17.34

-2.4% (YTD: +14.1%)

THE CLOSING BELL-

The EGX30 rose 0.5% at yesterday’s close on turnover of EGP 8.1 bn (38.9% above the 90-day average). Local investors were the sole net buyers. The index is up 20.2% YTD.

In the green: Misr Cement (+5.2%), GB Corp (+4.9%), and Eastern Company (+2.7%).

In the red: Juhayna (-3.3%), EFG Holding (-2.6%), and Edita (-1.9%).

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Our weekly deep dive into the green economy and ESG issue in Egypt.

Published every Tuesday in EnterpriseAM.

Read going Green
8

Going Green

The desert is done waiting for the grid, thanks to off-grid green push

For decades, development in Egypt has been constrained by the limits of the national grid. If a project was not close to the Nile or within reach of state transmission lines, it rarely moved forward. But a new class of off-grid private utilities is beginning to rewrite the rules of desert economics, wagering that the future of Egyptian industry and agriculture lies in the country’s hinterlands — powered by localized green energy.

Instead of waiting for grid expansions or state-backed megaprojects, these players are leapfrogging the national grid by deploying decentralized systems that generate water and renewable power at the point of consumption. The model is reshaping desert economics, lowering upfront costs, and opening new pockets of commercially viable development.

One local company pushing the off-grid frontier model is Engazaat, which recently undertook a strategic pivot from family-run contractor to regional green infrastructure platform, targeting a USD 250 mn development pipeline over five years, co-founder and CEO Muhammad El Demerdash said at a presser attended by EnterpriseAM this week.

El Demerdash explained that limited grid coverage has long constrained desert development. To bridge the gap, the firm adopted an integrated Water-Energy-Food Nexus model, creating self-contained green development hubs to support agri-industrial production.

But Engazaat is just one data point in a broader pattern. From KarmSolar ’s Marsa Alam solar grid to the government’s NWFE program, momentum is building around decentralized, green, and integrated utilities that produce water and power where they are needed, rather than transporting them across long distances.

Why this matters

Traditionally, reclaiming desert land required massive public spending on transmission lines, pumping stations, and grid extensions. Off-grid utilities allow private developers to bypass these constraints, making projects bankable without waiting for state infrastructure or having to rely on more polluting power sources.

We are seeing the death of the buy-and-build model. Companies like Engazaat and KarmSolar are offering zero-capex solutions, where the clients pay consumption-linked tariffs for water and power to pay for the infrastructure. What was once a multi-mn USD capital hurdle is becoming a predictable operating expense.

The approach eases pressure on the national grid as it grapples with load-shedding and price volatility. Islanding — the ability to operate independently of the grid — is emerging as a strategic necessity for export-oriented agriculture and high-value manufacturing, especially if firms are looking for green credentials to counter carbon tariff fears.

How Engazaat’s decentralized model works

The company is shifting toward decentralized, off-grid systems that integrate water, energy, and food production. A digital backbone allows remote monitoring of consumption, emissions, and production chains, improving transparency for end consumers. Projects are benchmarked against digital climate KPIs and audited by third parties to ensure international compliance and certify carbon credits.

Financing is structured around zero-capex and pay-as-you-go models, with Engazaat funding assets in exchange for long-term, consumption-linked tariffs. Lower interest rates and a more stable EGP have revived momentum for sustainable infrastructure investment and local-currency financing.

Tangible operational savings: The model delivers measurable efficiency gains, particularly in agriculture. By leveraging Egypt’s high solar irradiation, Engazaat supplies power at a lower cost than diesel or grid electricity. El Demerdash said solar energy now accounts for up to 30% of consumption at some client factories, while water reuse technologies hit 96% efficiency — cutting costs and boosting energy independence.

Engazaat’s portfolio includes the solar- and groundwater-powered SAVE-1 project on 2.2k feddans in Dakhla Oasis and the SAVE-2 desalination plant in Maghara, part of the 1.5 mn-feddan project. The firm is also collaborating with Nestlé on low-carbon food production and rolling out solar projects in the SCZone and Ain Sokhna.

Engazaat is also delivering solar solutions for Majid Al Futtaim malls in Egypt and Lebanon and working with e-finance and the National Bank of Egypt on financing schemes for small-scale farmers to support modern irrigation.

While Egypt remains its core market, Engazaat is expanding operations in the UAE and Lebanon, with plans to enter West Africa after 2026, El Demerdash noted. The firm is exploring PPPs with the Egyptian government in desalination and agri-infrastructure. To fund growth over the next five years, Engazaat is weighing a minority IPO on the EGX or a regional exchange, or bringing in a strategic partner.

The firm is nearing the validation stage for its first certified carbon credit issuance, viewing credit sales as a core component of project returns. Significant water savings and clean energy reliance are boosting the firm’s appeal to ESG investors, reflecting a broader shift among private infrastructure players — from project contractors to long-term climate investment platforms.

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CALENDAR

2026

FEBRUARY

10 February (Tuesday): Capmas expected to release inflation data for January.

11-12 February (Wednesday-Thursday): Gitex Global’s AI Everything Middle East & Africa Summit.

12 February (Thursday): Monetary Policy Committee’s first meeting of 2026.

19 February (Thursday): First day of Ramadan (TBC).

MARCH

15 March (Sunday): IMF to hold its seventh review of Egypt’s USD 8 bn EFF arrangement.

21 March: (Saturday): Eid El Fitr starts (TBC).

30 March – 1 April (Monday-Wednesday): Egypt International Energy Conference and Exhibition (EGYPES).

APRIL

2 April (Thursday): Monetary Policy Committee’s second meeting of 2026.

12 April (Sunday): Coptic Easter.

25 April (Saturday): Sinai Liberation Day.

MAY

1 May (Friday): Labor Day.

21 May (Thursday): Monetary Policy Committee’s third meeting of 2026.

27-29 May (Wednesday-Friday): Eid El Adha (TBC).

JUNE:

30 June (Tuesday): National holiday in observance of the June 30 Revolution (TBC).

JULY

9 July (Thursday): Monetary Policy Committee’s fourth meeting of 2026.

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

AUGUST

20 August (Thursday): Monetary Policy Committee’s fifth meeting of 2026.

26 August (Wednesday): National holiday in observance of Prophet Muhammad’s birthday (TBC).

SEPTEMBER

15 September (Tuesday): IMF to hold its eighth review of Egypt’s USD 8 bn EFF arrangement.

24 September (Thursday): Monetary Policy Committee’s sixth meeting of 2026.

27-29 September (Sunday-Tuesday): Global Conference on Population, Health, and Human Development.

OCTOBER

6 October (Tuesday): Armed Forces Day.

29 October (Thursday): Monetary Policy Committee’s seventh meeting of 2026.

DECEMBER

17 December (Thursday): Monetary Policy Committee’s eighth meeting of 2026.

EVENTS WITH NO SET DATE

Early 2026: Passenger operations on the New Administrative Capital-Nasr City monorail scheduled to begin.

Early 2026: The government will launch the second package of tax breaks.

1Q 2026: Trial operations for the Ain Sokhna-Sixth of October section of Egypt’s first high-speed rail line scheduled to begin.

1Q 2026: Turkish President Recep Tayyip Erdogan to visit Egypt.

May 2026: End of extension for developers on 15% interest rates for land installment payments.

2H 2026: Operations at Deli Glass Co’s new USD 70 mn glassware factory kick off.

2027

20 January-7 February: Egypt to host the African Games.

April 2027: Tenth of Ramadan dry port and logistics hub to begin operations.

EVENTS WITH NO SET DATE

2027: Egypt to host EBRD’s annual meetings.

2027: Egypt-EU Summit 2027.

End of 2027: Trial operations at the Dabaa nuclear power plant expected to take place.

September 2028: First unit of the Dabaa nuclear power plant begins operations.

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