Egypt’s default risk dropped and shares rallied as Hosni Mubarak stepped down as the country’s president and handed power to the military, bowing to the demands of protesters.
The cost of insuring Egyptian government debt fell 13 basis points to 324, according to CMA prices for credit-default swaps, tumbling from as high as 379 basis points earlier today. The Market Vectors Egypt Index ETF, an exchange-traded fund that holds Egyptian shares, gained 4.5 percent in New York. Egypt’s 5.75 percent dollar bond due 2020 rebounded, cutting the yield by 14 basis points to 6.33 percent, according to data compiled by Bloomberg.
“The new blood that may come to the system may come up with new ideas that will help the economy,” said Mohammed Ali Yasin, chief investment officer at Abu Dhabi-based financial services company CAPM Investments PJSC. “You’d see an influx of liquidity in loans from regional players.”
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