Egypt Daily News – Egypt is increasing its efforts to be re-listed in the JPMorgan bond index underscore the country’s focus on enhancing its financial markets and attracting foreign investment. Inclusion in such indices can significantly increase demand for a country’s bonds, as many institutional investors track these indices for their portfolios.
To improve its chances of getting re-listed, Egypt may be working on various fronts, including:
- Economic Reforms: Undertaking structural adjustments and reforms to stabilize and strengthen its economy.
- Debt Management: Effectively managing its government debt and reducing fiscal deficits to ensure a more favorable fiscal outlook.
- Foreign Exchange Policies: Implementing policies to maintain exchange rate stability and improve foreign exchange liquidity.
- Engaging with Investors: Actively engaging with international investors to rebuild confidence in the Egyptian economy and its debt instruments.
- Regulatory Framework: Strengthening regulatory frameworks for its bond markets to align with global standards.
- Market Conditions: Supporting favorable market conditions and a more predictable environment for investments.
Why was Egypt removed from the “JP Morgan” index?
The deletion decision came in the early months of 2024 amid a foreign currency shortage crisis that the country has been suffering from, which affected the ability of foreign investors to transfer their funds, after Egypt had been a preferred investment destination.
However, the situation has changed recently after Egypt received support from investments and loans as part of a global rescue package amounting to $57 billion, led by the UAE and the International Monetary Fund.
Egyptian bonds regain their luster
Some emerging market investors are now pushing to re-list Egypt on the JP Morgan index, which would allow them to invest in local debts denominated in Egyptian pounds at prices they find attractive. But the fact that Egypt was removed twice in the past decade and a half—first in 2011 during the wave of political unrest—makes this decision subject to careful scrutiny.
The fears of Egypt defaulting are fading.
Concerns about the possibility of Egypt defaulting on its debts have faded, as bond yields exceeded 20 percentage points, and the inflation-adjusted interest rate turned positive for the first time in years, boosting optimistic sentiments.
So far, most new foreign investments have flowed into short-term treasury bills. But Egypt’s re-inclusion in the JP Morgan index could allow the Egyptian government to attract long-term investments from passive investment funds that track this index.
If successful in its re-listing efforts, Egypt could see increased capital inflows and improved market conditions, which would be beneficial for its economy.
