Volatility is the word of the moment – not only on Egypt’s streets, but in investor perceptions of events as well. After rising sharply for five sessions up until Monday, the cost of Egyptian bond insurance dropped suddenly on Tuesday.
The spread on five-year credit default swaps fell from its intra-day peak of around 450 basis points in the previous session to around 390 basis points. It could be that investors have found reason to relax in the army’s vow not to use force against protestors.
But outstanding uncertainties – especially over what kind of government would emerge if President Hosni Mubarak stood down – probably still outweigh the signs of stability.
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