Egypt seen foreign investment in debt instruments hits record high

Foreign investment in Egyptian debt instruments recorded a new record high, reversing the outflows in 2020 which were triggered by the coronavirus (COVID-19) pandemic, the Head of the Finance Ministry’s debt management unit, Mohamed Hegazy told Bloomberg.

At the end of February, foreign holdings of the country’s treasury bills and bonds amounted to $28.5 billion, Hegazy told the international news agency.

The surge in foreign investments was driven by the North African nation’s high real-interest rate, which ranked second among 50 major economies tracked by Bloomberg following Vietnam, in addition to returns of 1.7 percent since the end of December 2020, compared to an average decrease of 2.7 percent across emerging markets.

Since the flotation of the Egyptian pound as part of an economic reform programme in 2016, foreigners have injected billions of dollars into the country’s debt instruments.

In Spring 2020, foreign outflows reached about $17.5 billion due to the pandemic.

The proportion of bonds’ net issuance grew to 110 percent of local offerings by the end of February, surpassing the target of 80 percent by June, Hegazy added.

Egypt plans to cut borrowing costs by extending the average maturity of its debt, he added, noting that new debt instruments issued this year could attract more investors and lower borrowing costs.