Egypt re-introduction to JPMorgan bond index may attract $4.8bln

Egypt  is on track secure a spot on JP Morgan’s emerging-market government bonds index in 2H2021, unlocking up to $ 4.8 bn in new inflows from passive funds that track the index,  Rand Merchant Bank economist Neville Mandimika told Reuters.

Egypt relisting on the index may potentially lead to a 5 percent EGP appreciation against the USD

This would end a decade of absence from the index, which Egypt was removed from in 2011 in the aftermath of the 25 January Revolution.

Why we’re eligible now: Egypt now has a combined nominal $28.2 bn in longer-term bonds maturing in over 2.5 years, which is the minimum maturity for inclusion in the index.

The inclusion of its eligible debt instruments would give Egypt a 2 percent weighting in the index and divert a portion of around $ 240 billion of assets under management.

It could also lead to a natural decrease in yields, which tend to drop an average 130 bps before inclusion, Mandimika said.