BNP Sees Egypt Yield Surge Fading as Deficit Eases: Arab Credit - Bloomberg

BNP Sees Egypt Yield Surge Fading as Deficit Eases: Arab Credit - Bloomberg:



"The increase in Egypt’s borrowing costs after President Abdel-Fattah El-Sisi raised energy prices will be short-lived because the measures will help narrow the budget deficit, BNP Paribas Egypt and Capital Economics said.



El-Sisi’s decision to cut fuel subsidies will reduce borrowing needs, helping lower yields by as much as 1 percentage point by the end of the quarter, said Nour Mohei-el-Din, assistant general manager for treasury at BNP Paribas Egypt. The average yield on nine-month notes advanced 16 basis points to 11.1 percent this week at the first sale after prices rose. The yield on seven-year bonds sold yesterday climbed 36 basis points to 14.53 percent, the highest since August.



“We expect a one-time inflationary impact that may force yields up over the next month before they stabilize and come back down,” Mohei-el-Din said by phone from Cairo yesterday. “The government took a serious step to cut the deficit.”"



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