Bloomberg News

Egypt Dollar Bond Falls on Tantawi Comments, FDI Decline

October 03, 2011

(Updates with analyst comment in fourth paragraph.)

Oct. 3 (Bloomberg) -- Egypt’s 2020 dollar bond dropped after foreign direct investment slumped and the head of the ruling military council made statements that may exonerate former President Hosni Mubarak, increasing the risk of unrest.

The 5.75 percent 10-year note fell, pushing the yield up four basis points, or 0.04 percentage point, to 5.84 percent at 2:54 p.m. in Cairo. Five-year credit default swaps climbed 13 basis points to 485, according to data provider CMA, the highest on a closing basis in almost a week. The benchmark EGX 30 Index of stocks lost 2.8 percent.

“Investors are apprehensive about the developments on the political front,” said Moustafa Assal, head of fixed-income at Cairo-based investment bank Beltone Financial Holding. “There’s a fear more instability is in store because the gap between what’s happening in Tahrir Square and what’s happening at the military council is not narrowing.”

Mohamed Hussein Tantawi, head of the Supreme Council of Armed Forces, said yesterday the army didn’t receive orders to shoot protesters. He testified last week at the trial of Mubarak, who is charged with corruption and involvement in the killing of protesters during the uprising that ousted him.

Foreign direct investment in Egypt fell 96 percent to $99 million in the fourth quarter ending June 30 compared with the same period last year, state-run Middle East News Agency reported today.

Egypt is due to hold parliamentary elections from November. The military agreed to amend the elections law to allow political party candidates to run for seats set aside for independents, Al Ahram newspaper reported yesterday. Presidential elections will take place 45 to 60 days after a constitutional referendum, the newspaper said. The military council hasn’t agreed to protester demands for ending military trials of civilians or ban Mubarak-era officials from running in the elections.

CMA is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.

--Editor: Claudia Maedler

--Editors: Claudia Maedler, Shanthy Nambiar

--Editors

To contact the reporter on this story: Ahmed A Namatalla in Cairo at anamatalla@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net


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