Egyptian markets stabilise to pre-protest levels

Egypt’s credit risk is falling to the lowest level since anti-government protests began two weeks ago and international borrowing costs are dropping as the nation’s biggest political crisis in three decades eases.

The cost of insuring Egyptian sovereign debt declined 6.5 basis points from yesterday’s London close, to 338.5 as of 9:50 a.m., the lowest level since Jan. 25, according to CMA prices. The yield on Egypt’s 5.75 percent bond due in April 2020 gained 11 basis points to 6.3 percent, down 89 basis points from a record high of 7.2 percent on Jan. 31, data compiled by Bloomberg show.

The government raised most of the 15 billion Egyptian pounds ($2.5 billion) sought at a debt auction yesterday as negotiations between opposition leaders and Vice President Omar Suleiman on constitutional changes needed to end the 30-year rule of President Hosni Mubarak made “big progress,” Egyptian billionaire Naguib Sawiris, a participant in the talks, said on Bloomberg Television.

“The market has digested the fact that things have changed and that the end result currently does not look calamitous,” said Oliver Bell, who helps oversee about $10 billion of emerging-market assets as a London-based senior investment manager at Pictet Asset Management. “It’s not as bad as everyone thought when the violence erupted, but I don’t think we can be certain that we know the outcome yet.”

Source: Bloomberg