Egypt’s Bondholders Show Skepticism Post-IMF in Lesson for EM
- Bonds slip as traders shrug off loan deal, await reforms
- Aggressive Fed path reduces appetite for distressed debt
Customers shop for fresh fruit and vegetables at the Al-Manhal market in the Nasr city district of Cairo, Egypt.
Photographer: Islam Safwat/BloombergThis article is for subscribers only.
Egypt’s IMF-led strategy to overcome its debt distress sounds like a perfect recipe for a rally in the nation’s debt -- except that money managers are skeptical about the plan’s execution.
In quick succession last month, the North African nation won a rescue package from the International Monetary Fund, tied up billions more in bilateral funding, embraced a more flexible currency regime and raised interest rates. But any expectation the tide of good news would spark market euphoria quickly faded: Egypt’s bonds began retreating and the cost to insure the country’s debt against default soared.