Debt-distressed emerging markets aren’t going to be issuing a lot of bonds next month
It’s going to be a quieter September than normal for debt-distressed EMs: Analysts expect junk-rated emerging markets to continue to shy away from international bond markets as they struggle with high borrowing costs and dwindling FX reserves, Bloomberg reports. Morgan Stanley, Goldman Sachs and JPMorgan all have low expectations for EM bond sales in September — usually a busy month as issuers look to capitalize on the higher post-summer demand from investors rebalancing their portfolios — and have slashed their 2022 forecasts for EM issuance. “Funding conditions should remain unfavorable for high yielders,” said Marcelo Assalin, head of emerging-market debt at William Blair International. “We see very little activity in the primary market in that space in the near term.”
Egypt is included in that list: Egypt is among a growing number of developing countries whose bonds are trading at distressed levels, indicating a rising risk of default amid rising borrowing costs and falling reserves. Egypt hasn’t issued fresh international debt since September when it pulled off a USD 3 bn issuance and has no immediate plans to sell new eurobonds.
But we could buck this trend: The Finance Ministry has started preparations to sell CNY-denominated bonds and is currently searching for bookrunners and investment banks to manage the issuance, Finance Minister Mohamed Maait told Enterprise last week, without disclosing a potential timeline.
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EGX30 |
10,340 |
+2.4% (YTD: -13.5%) |
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USD (CBE) |
Buy 19.09 |
Sell 19.20 |
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USD at CIB |
Buy 19.12 |
Sell 19.18 |
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Interest rates CBE |
11.25% deposit |
12.25% lending |
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Tadawul |
12,555 |
-0.5% (YTD: +11.3%) |
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ADX |
10,083 |
-0.7% (YTD: +11.9%) |
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DFM |
3,420 |
-0.4% (YTD: +7.0%) |
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S&P 500 |
4,228 |
-1.3% (YTD: -11.3%) |
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FTSE 100 |
7,550 |
+0.1% (YTD: +2.3%) |
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Euro Stoxx 50 |
3,730 |
-1.3% (YTD: -13.2%) |
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Brent crude |
USD 96.72 |
+0.1% |
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Natural gas (Nymex) |
USD 9.34 |
+1.6% |
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Gold |
USD 1,762.90 |
-0.5% |
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BTC |
USD 21,539 |
+2.0% (YTD: -53.4%) |
THE CLOSING BELL-
The EGX30 rose 2.4% at yesterday’s close on turnover of EGP 1.23 bn (34.8% above the 90-day average). Foreign investors were net sellers. The index is down 13.5% YTD.
In the green: Citadel Capital (+9.7%), Ibnsina Pharma (+7.7%) and CIB (+5.1%).
In the red: Egyptian Kuwaiti Holding (-1.1%) and E-Finance (-0.1%).
Asian markets are having a mixed start to the week: Shares in China and Hong Kong are comfortably in the green this morning while bourses elsewhere in the region are in the red, among them the Nikkei, the Kospi and the ASX. Stock futures indicate that last week’s sell-off in Europe and the US will continue this morning as investors continue to fret about how far the Federal Reserve is willing to go to curb inflation.