Dropping yields in Egypt could mean that fixed income investors will be moving to other emerging markets. Egypt is losing ground as a top haven for emerging market debt investors and interest rate cuts could make its short-term treasuries less attractive to foreign buyers in coming months, a report by CI Capital Asset Management picked up by Reuters said on Monday. Foreign buying appears to be tapering off as yields have come down, said CI Capital Asset Management economist Noaman Khalid. “We’ve seen that we’ve reached the limit of USD 19.8-20 bn as a cumulative balance of foreign holdings of debt … the monthly increases are now starting to be minimal,” said Khalid.

And the competition is: Economic conditions in emerging market competitors Nigeria, Argentina, Turkey and Ukraine meanwhile are expected to push their respective treasury yields several percentage points above Egypt’s over the next year, the CI Capital report said.

Not something we need to be worried about just yet: That is “something to watch out for, but we’re not there yet,” Anthony Simond, who helps manage Aberdeen Asset Management, tells Bloomberg. Egyptian officials are not too concerned, saying that a drop in yields will not necessarily mean an exodus, as investors are likely to accept lower returns in exchange for an improving risk profile. Oliver Weeks, economist at London-based Emso Asset Management Limited, agrees, noting that the improvement in the economy’s fundamentals provide room for the central bank to cut rates without seeing outflows. “But they need to be cautious … [yields after tax] will need to remain in double digits even with much lower inflation,” he said. Inflows into Egyptian debt might also be buoyed by the potential gains to the EGP.

Egypt is the only country expected to see a currency appreciation by the end of this year when benchmarked by Bloomberg against Argentina, Nigeria, Ukraine, and Turkey.

Emerging markets investment bank Renaissance Capital also sees the concerns as overblown. “Yes the attraction of Egyptian debt has reduced, but only from ‘extremely’ to ‘very’ attractive,” said the firm’s chief economist Charles Robertson. “We think inflation still has to fall from 14-12% in the next few months, the currency is 15% undervalued relative it owns history and is the third cheapest in emerging markets. It remains our top pick,” he said.