Egypt Debt, Stocks Climb as El-Sisi Win Spurs Saudi Call for AidAhmed A. Namatalla
Egyptian Eurobonds extended their winning streak and stocks rose the most in the world after Saudi Arabia’s King Abdullah called for an international effort to raise funds for the Arab world’s most populous country.
The yield on the benchmark 5.75 percent debt maturing in 2020 fell for a 13th day, dropping one basis point to 4.79 percent at 2:44 p.m. in Cairo and set for the lowest close since December 2010. The yield on the 6.875 percent 2040 notes fell three basis points to 6.89 percent. The benchmark EGX 30 Index of stocks climbed 1.92 percent, the most in three weeks.
King Abdullah called for a conference to attract financial support for Egypt after former army chief Abdel-Fattah El-Sisi won the presidency yesterday. Saudi Arabia, the United Arab Emirates and Kuwait have pledged at least $15 billion to Egypt since the military ousted Islamist President Mohamed Mursi last year, helping fuel a market rally that reduced the country’s sovereign spread by almost 60 percent to 322 basis points, the lowest since July 2011, JPMorgan Chase & Co. indexes show.
“The risk of default on these bonds has been relatively high by the standards of most emerging markets due to the dollar shortage over the last three years,” William Jackson, London-based emerging markets economist at Capital Economics Ltd., said by phone. “The prospect of further external support from Gulf countries drastically reduces that possibility, and we’re seeing that reflect on pricing of the debt.”
The benchmark index rose the most in three weeks to 8,116.19 at the close in Cairo. Global Telecom Holding SAE, a unit of Russia’s VimpelCom Ltd., led gainers with a 5.1 percent jump to 5.34 pounds.
Egypt “needs us today more than ever,” King Abdullah said. He called for a donor conference “to help Egypt out of its economic crisis,” according to the kingdom’s official press agency. The U.A.E.’s foreign minister said last week that its search for partners to support Egypt includes the International Monetary Fund and the World Bank.
Even with the Gulf nations’ backing, Egypt’s $280 billion economy is growing at the slowest pace in two decades as tourists and investors stay away amid political unrest. The Egyptian pound was little changed at 7.1504 per dollar after a central bank currency sale, having tumbled 19 percent since the start of protests that toppled President Hosni Mubarak in 2011.