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Egypt to Join JPMorgan’s Government Bond Index

Egypt to Join JPMorgan’s Government Bond Index

Sunday, 18 April, 2021 - 10:45
Egypt’s Minister of Finance Mohamed Maait.

Egypt’s Minister of Finance Mohamed Maait expected his country to join JPMorgan’s Government Bond Index Emerging Markets (GBI-EM) suite within a maximum period of six months.

In the event of index inclusion, Egypt would have a weight of about 1.8 percent in GBI-EM Global Diversified, with 14 Egypt government bonds with a total notional value of $24 billion under review for eligibility.

Earlier this month, JPMorgan said it had placed the country on Index Watch Positive after steady improvement in liquidity and access to the onshore government bond markets for foreign investors.

In a press statement on Saturday, Maait said upon its inclusion Egypt and South Africa would become the only two countries in the Middle East and North Africa to join the index.

Egypt is making steady steps towards economic reform to enhance the confidence of international financial institutions and the foreign investment community in the Egyptian financial market, Maait explained.

“It is also set to attract more foreign investors to Egyptian debt instruments in the local currency.”

Egypt, which was removed from the index in the aftermath of a 2011 uprising, has been working for more than two years to be relisted by meeting the requirements of JPMorgan Chase.

These requirements include extending the life of the government debt, adjusting the Yield curve and raising the rate of foreign investors’ participation in government financial instruments.

This step reflects the ministry’s continuous efforts to reduce the cost of public debt as part of the state’s measures to achieve economic reforms, the minister stressed.

“After Egypt joins the index, about $4.4 billion will be pumped as additional new investments into the government’s securities market.”

They will be pumped in the form of Treasury bills (T-bills) and bonds (T-bonds), thus achieving a debt management strategy to reduce the cost, he explained.

According to Deputy Minister for Financial Policies and Institutional Development Ahmed Kouchouk, Egypt’s joining of the watch list is a preemptive step to fully joining the index.

It reflects the Ministry of Finance’s continuous efforts to raise the efficiency of public debt management and reduce the cost of its service, he stated.

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