The Central Bank of Egypt netted USD 4 bn on Tuesday as it collected the proceeds from the eurobond issuance last week, Central Bank Governor Tarek Amer said, according to Reuters. Given that Tuesday was the last day of January, we expect that the bond proceeds will be reflected in a markedly improved reserves figure when it’s announced next Tuesday, offset in part by around USD 700 mn in repayment to the Paris Club.

Amr El Garhy gets big love in the Financial Times: To Finance Minister Amr El Garhy, “winning over international bond investors meant convincing them that last year’s sharp currency devaluation marked a turning point for the country’s economy,” Eric Platt and Elaine Moore write for the Financial Times (paywall). With an oversubscribed total order book in excess of USD 12.25 bn, according to lead manager BNP Paribas, the figure suggests El Garhy “successfully sold the story of a country willing to enact long-resisted reforms and heal an economy that has struggled to attract international money since the 2011 Arab Spring uprising.” BNP Paribas’ Rajiv Shah says “In the 30-year part of the curve, investors were willing to bet on the credit improvements in Egypt.” Platt and Moore also mention that Egypt plans the tap the international bond market again in early 2018, possibly with a EUR-denominated issuance.

…Separately, following on the news of inflows to the banking sector reaching USD 9 bn since the EGP float, foreign holdings of treasury bills have reached EGP 10.2 bn in December, more than ten times the amount held in October, Bloomberg’s Ahmed Feteha writes. Naglaa Nozahie, Assistant Sub-Governor for Economic Research at the central bank, mentioned specifically that foreigners’ holdings of Egyptian treasuries ballooned in November 2016 to EGP 7.8 bn and hit EGP 10.2 bn the following month, according to Al Masry Al Youm.

“Trust in the system is growing,” Assistant Sub-Governor Rami Aboul Naga told Bloomberg. Arqaam economist Reham ElDesoki agrees, adding that “the diversity of sources of inflows from remittances, individuals, and investments is a major indicator of the success of the new system … Now there is a gradual erosion of the foreign currency backlog. Once this happens, the EGP will start strengthening and the black market will completely disappear.”

Hany Farahat, senior economist at CI Capital, tells Reuters that the backlog — which he estimates runs between USD 7-9 bn — is the crux of the issue. “If nothing happens on that front, then I think progress will be much lower," Farahat said.