EXCLUSIVE- Euroclear is in Egypt to wrap up procedures that will make EGP-denominated debt “euroclearable”: A delegation from Euroclear is currently in town to ensure Egyptian debt meets the technical requirements to make it clearable through the Belgium-based clearinghouse, two government officials tell Enterprise. The delegation sat down with Misr for Central Clearing, Depository and Registry (MCDR), and Central Bank of Egypt (CBE) representatives to discuss this “technical alignment,” one of the sources said. The first sovereign debt issuance that can be cleared through Euroclear is expected to take place in 4Q2019.

The volumes we’re talking about are significant: The Finance Ministry will be looking to eventually have EGP 1.4 tn-worth of treasuries and EGP 1.1 tn-worth of government bonds eligible to move through the clearinghouse.

Both domestic and foreign investors are queuing up for EGP-denominated debt instruments, the second government official tells us. Egyptian banks are the largest local creditor, with holdings north of EGP 350 bn. Holdings by foreign investors, meanwhile, broke the USD 17 bn (c. EGP 290 bn) mark for the first time, CBE board member Fakhry El Fekky told us last week. The EGP has been one of the best performing so-called “exotic” currencies this year, climbing 6% against the USD since the end of January.

Background: The Finance Ministry signed an MoU with Euroclear last April to make EGP-denominated debt available via the Belgium-based clearinghouse. The move will facilitate settlement for overseas investors — who can currently only access the debt market through a handful of local banks licensed to operate as primary dealers (pdf). Finance Minister Mohamed Maait, who opened talks last September, said that Egypt will not issue yen- and yuan- denominated bonds — or green bonds or sukuk, for that matter — before the next fiscal year to give the government more time to prepare and comply with Euroclear regulatory requirements.