Last week’s interest rate cut could save Egypt’s coffers EGP 15 bn in debt service: The Finance Ministry could spend EGP 10-15 bn less on interest it owes to investors during 2Q FY2019/2020 after the Central Bank of Egypt (CBE) last week cut benchmark rates by 150 bps, unnamed government sources tell the local press. The FY2019-2020 state budget forecast debt service payments to rise to EGP 569.1 bn this fiscal year compared to EGP 541 bn in FY2018-2019.

T-bill yields fall in first post-rate cut auction: Average yields on 3-month treasury bills dropped to 16.443% in an auction yesterday, down from 17.904% last week, CBE data showed. Yields on 9-month bills also dropped to 16.378% from 17.834% last week. Mahmoud Naglah, executive director of money markets and fixed income at Al Ahly Financial Investments Management, told the local press that he expects yields on 6-month and 1-year t-bills to fall 50 bps at the next auction. This would put them at around 17.077% and 16.699 respectively, maintaining Egypt’s position as one of the most attractive carry trades in the world.

A step in the right direction for business: The rate cut will have a “positive albeit slight” effect on the country’s exports, Food Export Council head Hani Berzi tells Al Mal, adding that exporters are hoping the central bank will cut rates more aggressively over the next few months to encourage investments and capex spending. Talaat Moustafa Group Chairman Hisham Talaat Moustafa also tells Reuters’ Arabic service that the resumption of easing will be a boon for the real estate sector.