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Tuesday, 16 May 2017

What we’re tracking on 16 May 2017

Egypt will issue a USD 1.5-2 bn eurobond next week, Finance Minister Amr El Garhy told Reuters yesterday. This comes following the strong appetite for Egypt’s USD 4 bn eurobond in January. “The new bonds will not require a second roadshow as they will be part of the same debt programme issued in January,” according to Reuters. Egypt raised “twice as much as targeted and at lower yields than expected” in January and “a second issuance with high turnout in just five months would suggest growing appetite among foreign investors for Egypt,” the wire service says. The move comes after the Ismail government raised in April the cap on the total value of bonds it can issue in a year to USD 7 bn from USD 5 bn. “The government’s current trend is to replace domestic borrowing by external borrowing in order to reduce the cost of borrowing as local interest rates rise,” Reham El Desoki of Arqaam Capital said at the time.

That spread may be even more stark by next week, as the nation’s business community braces itself for a meeting of the Central Bank of Egypt’s Monetary Policy Committee (MPC) this coming Sunday, 21 May. How the MPC will react to pressure from the International Monetary Fund to hike rates was very much on the minds of attendees at CI Capital’s MENA investment conference in Gouna yesterday, a friend tells us.

<rant>You folks know where we stand on this one: Raising rates only hikes borrowing costs for the state and the thin slice of Egypt — corporate and retail — that enjoys access to credit. In a nation in which perhaps one in five people have access to a bank account, interest rates are not an effective means of transmitting monetary policy. And in a situation in which the spike inflation rate was driven by a one-off event (the float of the EGP) — and when that inflation is tapering month-on-month — it’s questionable whether an interest rate hike would be necessary even if we were an economy with reasonable banking penetration.</rant>

Something is brewing on the welfare front. The Social Solidarity Ministry is holding a press conference today on the most recent developments in government’s social welfare programs, Al Mal reports. Prime Minister Sherif Ismail, World Bank MENA Vice President Hafez Ghanem, Planning Minister Hala El Said, and Deputy Finance Minister Mohamed Maait are among those expected to attend, the newspaper reports.

Are we under pressure to join Saudi Arabia and Russia in their pact on cutting oil output? That’s the suggestion from the Wall Street Journal, where Egypt gets a brief mention alongside Turkmenistan: “Major producers are willing to extend the cut and are working to bring in new non-OPEC participants including Turkmenistan and Egypt, according to people familiar with the matter.” Reuters notes that Egypt and Turkmenistan will attend the 25 May meeting of OPEC as observers for the first time. Positive chatter from KSA and Russia on extending the pact into 2018 sent oil up 2% yesterday, breaking the USD 52 / bbl barrier.

Reading the tea leaves on China: We’re on the lookout today for clips from Investment Minister Sahar Nasr’s interview with China’s CCTV in Beijing on Monday, in which she talked about Egyptian-Chinese economic relations as well as investment opportunities in Egypt, especially under the new Investment Act, according to a ministry statement (pdf).

The Africa Finance Corporation’s infrastructure summit wraps up today in Abuja, Nigeria. Renaissance Capital’s chief economist Charles Robertson, Carbon Holdings CEO Basil El-Baz, and former Egyptian Finance Minister Youssef Boutros Ghali are among the summit’s speakers.

WannaCry isn’t going away — and its pal EsteemAudit may be on its way. The WannaCry ransomware attack prompted several large businesses in Egypt yesterday to push out awareness emails, patch machines and in at least one case take extraordinary security measures to ward against the attack. A second wave of ransomware could be coming: The Financial Times is warning this morning that the dark web has weaponized another leaked US National Security Agency tool (this one originally called EsteemAudit), which can now be deployed as a global attack by evildoers, well, anywhere. Meanwhile, some analysts are suggesting that North Korea may have had something to do WannaCry.

In short: Now may be the time to go re-read our suggested primer on how to figure out whether someone is setting you up for a phishing or ransomware attack.

And for you football nuts out there: Ronaldo is coming to Omm El Donia. Portuguese footballer Cristiano Ronaldo is arriving in Egypt today with his family to attend the opening of the Albatros Aqua Park in Sharm El Sheikh, Al Shorouk reports.

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