Egypt’s sovereign dollar bonds fell as much as 1.4 cents on Tuesday, wiping out most gains made last week. Optimism had grown after Saudi Crown Prince Mohammed bin Salman’s visit, but no new investments were announced.
Analysts had anticipated Saudi investment commitments, which did not materialize, leading to a market downturn. The 2059 maturity Egyptian Eurobond dropped to 74.73 cents on the dollar, according to Tradeweb data. This marked a 1.4-cent decline on the day and over 3 cents below levels from October 16.
Reports had circulated of possible Saudi investments in the Red Sea region, particularly Ras Banas and Ras Gamila. However, these did not come to fruition.
Earlier in February, Egypt sold real estate development rights on its Mediterranean coast to the UAE’s ADQ fund for $24 billion. That deal helped Egypt secure an $8 billion financial reform package with the International Monetary Fund (IMF) in March.
The IMF agreement requires Egypt to cut subsidies and allow its currency to float freely, sparking domestic dissatisfaction. On Sunday, President Abdel-Fattah al-Sisi hinted that Egypt might reconsider its commitments if international bodies did not account for regional challenges.
Sisi mentioned the country lost $6 billion to $7 billion in revenue due to regional unrest, including attacks on Red Sea shipping lanes. These attacks, linked to the Yemen-based Houthis, reduced Suez Canal revenues to $1.83 billion in the first half of the year, compared to $4.78 billion last year.
Egyptian officials are currently attending IMF and World Bank meetings in Washington to discuss ongoing issues. Despite the lack of publicized investment deals, separate private Saudi investments totaling $15 billion were announced after the visit, according to the Saudi-Egyptian Business Council.
