The yield on bonds in emerging markets, such as Egypt, South Africa, and a number of other countries, has risen in recent weeks as a result of anticipation of the American Federal Reserve’s decision to raise interest rates.
Interest rates on Egyptian bonds were raised in May by an average of 20 basis points over 5-, 10-, and 30-year bonds, sources familiar with the matter told Daily News Egypt.
In May, bond prices were $750m for 5 years at 5.45% versus 6.125% at the time of the offering in January; $10bn for 10 years at 6.65% versus 7.50% for January; and $1.25bn for 30 years at 7.95% versus 8.5% in January.
According to a recent statement by the sources, the increase is not related to the risk outlook of the Egyptian market, but is rather to do with the anticipation of the Federal Reserve’s decision to raise the interest rate.
The average increase in maturities was 20 points and had nothing to do with Egypt’s risk outlook. In recent months, the outlook was positive, but as a result of the external market’s anticipation of the Federal Reserve’s decision and its tendency to raise interest rates through its recent language and lower sales in emerging markets.
He pointed out that the number of other emerging markets raised the yield on their bonds more than the increase that was implemented Egyptian bonds.
Investors have received economic reforms in recent weeks in a positive manner in terms of raising electricity and fuel prices and approving the general budget, but they have not reflected on the bond movement, the sources said.