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Monday, 1 October 2018

Egypt angling for inclusion in JP Morgan emerging markets bond index?

Egypt angling for inclusion in JPM EM bond index? Egypt reportedly wants to be included in JP Morgan’s emerging markets government bonds index, three sources familiar with the matter tell Bloomberg. In preparation for its pitch, the government is taking steps to make Egypt’s debt eligible for including, including starting talks with Belgium’s Euroclear to facilitate the settlement of domestic debt for overseas investors. According to the sources, “ensuring cross-border domestic debt purchases could be cleared efficiently would also help facilitate Egypt’s inclusion in the index.” The government hopes that inclusion in the index would “encourage passive inflows and help ease the debt servicing burden” as demand for EGP-denominated dropped in the midst of the emerging markets sell-off, which has pushed up yields.

GCC countries are looking to do the same: “Saudi Arabia and four other Gulf countries will become eligible for inclusion in JPMorgan’s emerging-market bonds indexes from the end of January, potentially attracting billions of dollars in passive inflows,” Bloomberg writes.

FinMin carries through with treasury auction despite higher yields: The quest for inclusion on JPM’s EM bond index comes as an auction yesterday saw yields on 91-day treasury bills rise to 19.711% from 19.62%, while yields at the nine-month auction rose to 19.938% from 19.84% previously, according to CBE data. The auction saw the sale of EGP 10.6 bn worth of 91-day bills and EGP 10.37 bn worth of nine-month bills. The sale came after Finance Minister Mohamed Maait said last week that his ministry would call off sales of longer-term domestic bonds as long as yields remained high. The ministry had called off its fourth bond auction in as many weeks just a few days prior.

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