Egypt Approaches JPMorgan to Join EM Bond Index, Minister Says

(Bloomberg) -- Egypt approached JPMorgan Chase & Co.’s to be included inclusion in its emerging-market bond indexes and is making progress on a plan to make it easier for foreigners to invest in its local debt, Finance minister Mohamed Maait said.

“Our strategy aims to reduce our borrowing costs and make our debt more attractive,” Maait said in a telephone interview on Thursday. Joining the JPMorgan indexes would “have a positive impact as it will attract passive investors to the Egyptian debt instruments.”

Egypt is on a drive to attract more foreign investors to its debt as the most populous Arab country seeks to reduce borrowing costs as part of a program to overhaul its economy. Saudi Arabia and four other Gulf countries will become eligible for inclusion in JPMorgan’s emerging-market bonds indexes in January, potentially attracting billions of dollars in passive inflows.

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The Egyptian government also plans to complete steps needed to finalize an agreement with Belgium-based Euroclear, which settles transactions in securities in dozens of countries, by June. The deal would make it easier for foreigners, who currently have to go through a local bank, to invest in pound-denominated debt.

Foreign purchases of Egyptian debt have accelerated since the start of the year after pulling out about $10 billion from Egypt during a global sell-off last year. In debt auctions held this week, they bought 30 percent of Egyptian local-currency Treasury bills and more than half of longer-dated bonds.

Central bank Governor Tarek Amer told Bloomberg this month policymakers are committed to ensuring that the holders of Egyptian debt always make better return.

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