Bloomberg News

Egypt 2020 Dollar Bond Drops to Lowest Since May Before Poll

November 16, 2011

(Updates with analyst comment in fourth paragraph.)

Nov. 16 (Bloomberg) -- Egypt dollar notes due in 2020 fell, pushing the yield to the highest level in almost six months, amid investor concern that increasing violence may delay the transition to democracy.

The yield on the 5.75 percent bond advanced seven basis points, or 0.07 of a percentage point, to 6.09 percent, the highest level on a closing basis since May 18, at 4:00 p.m. in Cairo. Egypt’s five-year credit risk rose five basis points to 475, the highest level on a closing basis in more than a month, according to credit default swaps’ data provider CMA.

Activists are set to take to the streets on Nov. 18 to protest against constitutional guidelines written by the interim government and ruling military council. Violence has flared in several cities in the past week before elections for the lower parliament house, scheduled for Nov. 28. One person was killed and three were injured as security forces clashed with protesters who had been blocking a main road to the northern port of Damietta.

“The political transition has dragged out longer than people expect,” said Anthony Simond, emerging markets investment analyst at London-based Aberdeen Asset Management Plc. “With parliament not sitting until March 2012 and a president not in power until early 2013, investors are worried a coherent economic policy won’t be in place until mid 2013, which places more reliance on external aid.”

The ruling Supreme Council of the Armed Forces has not announced a date for the presidential poll. Parliament is set to convene in March to start the process of choosing a 100-person committee that will write a new constitution for the country, according to a time-line set by the council.

Twelve-month non-deliverable forwards for the Egyptian pound weakened 2.8 percent to 6.9925 per dollar, while the pound lost 0.1 percent to 5.9830.

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

--Editor: Claudia Maedler

--Editor: Claudia Maedler

--Editors: Claudia Maedler, Ash Kumar

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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