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Wednesday, 6 April 2022

Sovereign bond sales are on the up — and Egypt could be the biggest issuer in the region in 2022

Global sovereign bond sales will hit USD 10.4 tn this year, almost a third above the pre-covid average, S&P Global Ratings said in a report picked up by Reuters. The crisis in Ukraine combined with lots of refinancing will push up the amount of borrowing despite economies around the world recovering from the shock of the pandemic, the ratings agency said.

Egypt will become the biggest issuer of sovereign debt in EMEA this year, according to S&P, which forecasts the country to sell USD 73 bn in bonds, overtaking Turkey. Regionally, sovereign borrowing in EMEA will grow by USD 253 bn to reach USD 3.4 tn by the end of 2022.

Egypt, Kenya and Japan have the largest debt piles in need of refinancing this year, according to the report. Approximately 26% of the North African country’s debt will need to be rolled over this year, it said. (Editor’s note: We could not track down the report to independently verify the figures.)

Debt and equity markets took a tumble yesterday… Yields on US treasuries hit their highest level in three years amid a wider sovereign bond sell-off, the Financial Times reports. Meanwhile, stocks dropped, with the S&P 500 dipping 1.3% and the tech-heavy Nasdaq falling more than 2% — its biggest daily percentage drop in almost a month, CNBC notes.

…thanks in part to harsh words from the Fed: The selloff came following hawkish comments earlier in the day from senior Fed official Lael Brainard. The US central bank will start to reduce its USD 9 tn balance sheet “at a rapid pace” as early as its next meeting in May, and is prepared to take “stronger action” to rein in inflation, Brainard said. The Fed has already said it will consider larger, half-point rate hikes going forward. The market is now expecting rates to be increased at each of the central bank’s six meetings this year, with hikes potentially totaling 2.5 percentage points, according to CNBC.

In other financial news:

  • Elon Musk joins Twitter’s board after becoming its biggest shareholder: Twitter has announced it is appointing Elon Musk to its board, a day after the world’s richest person bought a 9.2% stake in the platform, valued at around USD 2.9 bn. Musk’s term is set to expire in 2024, according to a regulatory filing.
  • Ahli United Bank will acquire Citigroup’s consumer banking arm in Bahrain for an undisclosed sum, as the lender moves to exit retail operations in 13 markets. (Statement)

Down

EGX30

11,381

-1.3% (YTD: -4.8%)

Down

USD (CBE)

Buy 18.22

Sell 18.32

None

USD at CIB

Buy 18.19

Sell 18.29

None

Interest rates CBE

9.25% deposit

10.25% lending

Up

Tadawul

13,207

+0.3% (YTD: +17.1%)

Up

ADX

10,090

+0.3% (YTD: +18.9%)

Down

DFM

3,502

-0.5% (YTD: +9.6%)

Down

S&P 500

4,525

-1.3% (YTD: -5.1%)

Up

FTSE 100

7,614

+0.7% (YTD: +3.1%)

Down

Euro Stoxx 50

3,918

-0.8% (YTD: -8.9%)

Down

Brent crude

USD 106.64

-0.8%

Up

Natural gas (Nymex)

USD 6.07

+0.6%

Down

Gold

USD 1,924

-0.2%

Down

BTC

USD 45,890

-1.2% (as of midnight)

THE CLOSING BELL-

The EGX30 fell 1.3% at yesterday’s close on turnover of EGP 781.35 mn (20.1% below the 90-day average). Foreign investors were net sellers. The index is down 4.8% YTD.

In the green: Fawry (+4.4%), EFG Hermes (+4.3%) and Ezz Steel (+1.4%).

In the red: EKH (-4.3%), Palm Hills (-3.7%) and Elsewedy Electric (-3.5%).

IT’S LOOKING UGLY OUT THERE this morning. Asian markets are solidly in the red at dispatch time and futures suggest all the major benchmarks across Western Europe, the US and Canada will follow suit as the trading day grinds on.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; and Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt.