Another Eurobond issuance coming in September? It appears that the Finance Ministry is considering another EUR-denominated bond issuance in September, government sources reportedly told Al Borsa. The issuance will be to the tune of EUR 1-1.5 bn, a less ambitious target than previous eurobond sales in order to “get a feel for the markets,” sources added. The ministry is expected to propose the move to the Ismail cabinet for approval ahead of selecting investment banks to manage the issuance, which from the looks of it, may be the first foreign-denominated bond issuance in the FY2017-18 fiscal year.

The news comes as foreigners increased their holdings in Egyptian treasuries nearly 9x year-on-year to USD 9.8 bn during FY2016-17, Vice Minister of Finance Ahmed Kouchouk tells Reuters. “Foreign investment in domestic treasury bills and bonds reached USD 1.25 bn in June alone, and about USD 9 bn since the flotation,” he adds. Foreigners’ holdings in Egyptian treasuries had reached USD 9.3 bn (EGP 164 bn) as of 21 June.

Foreign investors bought almost half the T-bills on offer in the government’s Sunday auction for EGP 8.5 bn (USD 470 mn), encouraged by rising yields on six- and 12-month notes to c. 21%, the head of the Finance Ministry’s public debt division Samy Khallaf tells Bloomberg. Average yields on 10-year treasuries fell to c. 18.296% from 18.346% in the last auction, according to Reuters.

Companies are continuing to calculate adjustments to rising production costs after last Thursday’s fuel hikes. The Federation of Egyptian Chambers of Commerce expects price increases could range anywhere from 5-30% depending on the good, members of the tell Al Shorouk. With the costs of land transport already witnessing a reported 25% increases, companies, such as dairy and juice maker Juhayna, are already holding meetings to determine new pricing schemes. However, Juhayna intends to wait a while before issuing any increases, sources tell the press. Federation members said they expect food prices to rise by 3-5%, while building material costs are seen rising by no less than 30% — especially as the value-added tax also rises by 1 bps to 14%.

Majority of the anger continues to emanate from transport sector workers with anumber of drivers reportedly going on strike on Sunday, rallying outside city hall gates in different provinces to demand higher fares. This comes after a number of governorates, including Cairo, decided to hike taxi fares to EGP 5 from EGP 4 previously, increasing the price per kilometer by EGP 0.25 to EGP 2. Private cab companies will also be compensating their drivers for the increase in fuel prices,according to Al Borsa, with Uber offering each of its captains a EGP 15 cash bonus for every four trips, while Careem offers a EGP 3 bonus on each one.

Inflation will rise as a result of fuel hikes, but won’t be worse than before the EGP float: Analysts are fearing a reversal in Egypt’s cooling down of inflation as a result of the recent fuel hikes, but do not necessarily believe that the rate increase will be worse than before the EGP float. “Inflation over the next two months may rise to 34 to 36 per cent but the rate of inflation in the last two months of this year will be less than the same period last year when the pound was floated,” Pharos Holdings’ Radwa El Sweify tells AFP.

Vice Minister of Finance Kouchouk continued to defend the hikes on Sunday, stating that they cut the state’s petroleum products expenditures to around 7-8% of total spending.

Telecoms sector braces for VAT: As the date of implementing the value-added tax (VAT) in its second year closes in (we expect the FY2017-18 to be officially ratified tomorrow), the ICT sector is apparently in a flurry to secure regulatory approvals for price changes. Internet service providers will be taxed for the very first time under the VAT in FY2017-18 at 14%, and are looking to pass those on to the consumer after failing to convince the ICT Ministry to delay implementing the VAT for a second year. The government is hoping the VAT on internet would bring in revenues of EGP 700 mn this year, government sources tell Al Borsa.

How will this affect your phone and internet bill? It would appear that internet fees will definitely see a hike, with ICT Ministry sources telling MENA news agency on Sunday that prices for internet ADSL services will increase by 4%. This comes after internet services providers (ISPs) have apparently been pushing for a 15% increase in prices in talks with the National Telecommunications Regulatory Authority (NTRA), according to Al Mal.

...As for telecoms, the only apparent difference this will have on your phone credit is a 1% charge which will be deducted from airtime without charge given on recharge cards. Under a compromise with mobile network operators last year, recharge cards will carry a VAT of 10%, with the remaining 4% being granted to users as calltime. Both the NTRA and ICT Minister Yasser El Kady have promised that will not have any bearing on the retail price of recharge cards.

On a related note, El Kady said that TE Data will start offering internet packages at a minimum of 4 Mbps by the end of this year, Al Mal reports. Based on our humble customer experience, we can only hope that this means they might actually get their data up to the 2 Mbps they keep promising and we keep paying for.

Attention government suppliers and contractors. Finance Ministry looking to overhaul tendering process. The government will be introducing a slew of amendments to the Auctions and Tenders Act, where amendments aim to decentralize tendering procedures and unshackle government bodies to be able to quickly select winning bids on projects, El Garhy said according to Al Shorouk. These include facilitating procedures that allow government bodies to purchase key strategic goods directly from commodities and other exchanges. The new changes will also ease restrictions on government bodies to make direct order purchases, El Garhy added. Furthermore, the amendments will promote two-stage tenders in order to give the government a breadth of options when choosing contractors and suppliers. The law will also allow government bodies to lease assets instead buying them outright when it is economically feasible.

The government will also be limiting its spending on projects by placing restrictions on the amount bodies can payout in a tender, a move which also has the added benefit of spurring contractors to reach out to the banking sector for funding.

The amendments will also serve to benefit the private sector in a number of ways, said El Garhy. The law will reduce the security deposit amount required by contractors to at least 1.5% of the tender amount, and will include provisions for the swift return of the deposits following completion of a project. The law will also look out for SMEs, mandating that agencies ensure that 10% of bids of under EGP 1 mn go to SMEs, he added.

Greater oversight on the unpopular “private funds” — state discretionary funds which have gained a reputation as slush funds — will also be among the new amendments to the law, said El Garhy.

The Finance Ministry plans to introduce the amendments to the House of Representatives as soon as possible as part of a package of legislative reforms which include the amended Companies Act, which the Ismail cabinet had signed off on last month, El Garhy said in a statement over the Eid break. Most important of these will be

The battle to maintain 0.05% ergot rule continues: The government filed an appeal against last month’s Administrative Court verdict that ordered the suspension of a food inspection system which could potentially see the return of the zero-tolerance rule on ergot-contaminated wheat imports, Supply Minister Ali El Moselhy told Reuters on Saturday. The court had ruled last month that responsibility for wheat inspection be transferred back to the Agriculture Ministry’s quarantine body — the architect of Egypt’s ergot ban last year — from the General Organization for Export and Import Control. State grain purchaser the General Authority for Supply Commodities had repeatedly insisted that the zero-tolerance policy, which racked international grain markets last year, was not coming back despite the ruling as both the ministries of supply and agriculture are in agreement on the current policy.

IPO WATCH- Four of the country’s most prominent law firms are reportedly bidding for the role of legal advisor on the listing of state-owned Enppi on the EGX, sources with knowledge of the matter tell Al Borsa. The list of suitors includes Baker and Mckenzie, Matouk Bassiouny, Zaki Hashem and Partners, and Zulficar and Partners. Investment bank Arqaam Capital has also formed an alliance with Deutsche Bank that looks to serve as bookrunner, the sources add. Enppi’s IPO, which is expected before the end of 2017, is being managed by the state’s investment bank NI Capital and hopes to raise USD 100-150 mn. Sources said NI Capital should be announcing the winners before the end of July

EFG Hermes Asset Management to manage two funds for Ahli United Bank: EFG Hermes Asset Management has been selected to manage two Ahli United Bank-Egypt funds, the bank’s “Tharwa” money-market fund and its “Alpha” Egyptian equity fund, according to an EFG Hermes statement. The move brings the number of conventional money-market funds managed by EFG Hermes Asset Management in Egypt to seven and its total number of funds under management to 18. The move is telling of an apparent uptick in money-market fund investments in the country. “The Egyptian capital market is gaining momentum, leading a growing number of investors to become willing to deploy funds here,” said Karim Moussa, head of asset management & private equity at EFG Hermes.

The Walt Disney Company has lifted a ban on having its merchandise manufactured in Egypt, Trade and Industry Minister Tarek Kabil announced on Sunday. Disney had instituted the ban in February after a drop in Egypt's ratings in “worldwide governance indicators and the country not joining the International Labour Organisation's (ILO) Better Work Programme,” according to Ahram Online. The ban’s lifting follows negotiations between the company and the Egyptian government, which started March.

Egypt will begin implementing the ILO’s Better Work Programme, which pushes its own labor standards for industry, following the ban, Kabil added. The program — which will be implemented across two stages through to next year — will also provide several services to clothes export chains, including an assessment of factories, consultancy services and training.

It appears that Egypt’s economic “Cinderella story” also helped bring Disney back to the fold, as Kabil also proclaimed Egypt’s improved credit scores and economic reforms in coordination with the IMF and World Bank had helped bring about this change of heart. We had been noting that these talks may have involved Israel — when Disney reportedly halted imports of textile exporters under the Qualified Industrial Zones agreement — and the US, during President Abdel Fattah El Sisi’s visit to the US in April.

Majid Al Futtaim acquired 26 Geant stories from Retail Arabia’s parent company BMA International, in addition to four Gulfmart supermarkets in Bahrain, The National reports. The stores will be rebranded to Carrefour, bringing the number of Carrefour supermarkets to 80 in the UAE, 11 in Bahrain, and eight in Kuwait. The value of the acquisition was not disclosed.

MOVES- US Ambassador to Cairo R. Stephen Beecroft departed Cairo after completing his three-year tenure which began back in 2014, according to an e-mailed statement. Deputy Chief of Mission Thomas H. Goldberger will currently serve as Chargé d’Affaires to the US Mission in Egypt. Goldberger previously served in Baghdad and Tel Aviv.

Separately, Swedish ambassador to Cairo Charlotta Sparre is also leaving Cairo, as her post is coming to an end. She has served since 1 September, 2013. Jessica Olausson is Deputy Head of the Mission, according to the embassy’s website.

A Cairo court upheld yesterday the death penalty for 20 individuals accused of killing 11 policemen in Kerdasa in 2013, Reuters reports. 80 other defendants in the case were sentenced to life in prison, while 30 were handed 15-year sentences. Wire coverage of the story is getting widespread pickup in the international press.

Top international news worth noting in brief include:

• Iran plans to sign today a USD 4.8 bn contract with Total and China National Petroleum Corporation to develop its share of the world’s biggest natural gas field, the first investment in the country by an international energy company since sanctions were eased last year.
• The EU’s competition watchdog is considering tough new powers to intervene earlier in antitrust problems after it slapped Google with a EUR 2.4 bn antitrust fine last weekend, the FT reports.
• Saudi Arabia is considering a plan to sell a stake in Riyadh airport as part of its push to privatization, according to Bloomberg.