moody’s commends new cbe regulations
TRANSCRIPT
Thursday21st Jan. 2016
Issue # 3
THE WEEKLY
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The international credit rating agency, Moody’s stated that the latest measures taken by the Central Bank of Egypt (CBE) concerning the debt burden ratio for retail customers, and reducing maximum loan limits for single corporate customer are credit positive for banks .
The agency sees these new macro-prudential initiatives will contain the credit risk in banks’ growing retail portfolios and will reduce banks’ asset quality vulnerability from large single corporate customer concentrations.
On the other hand, Moody’s stated that the measures designed to encourage banks’ financing to Small and Medium Enterprises (SMEs) could negatively impact credit portfolio quality, as the rapid growth in SMEs financing to reach the 20% target of total loans portfolio at banks could compromise asset quality.
Egypt To Offer Shares In State Banks & Companies In EGXEgypt Paid USD700 Million To Paris Club CreditorsThe Parliament Ratified 323 Laws And RegulationsFDI Inflows Register USD1.4 Billion During Q1 FY 2015/16Egypt To Sign USD1 Billion Loan With ChinaUSD200 Million Grant From Saudi Arabia For SMEs
IN THIS ISSUE...
A WORLD OF REAL POSSIBILITIES
1
NEW CBE REGULATIONS
MOODY’S COMMENDS
“SME lending will support job creation and help lower the unemployment rate which registered 12.8% in September 2015 as SMEs employing fewer than 10 workers represent 97% of Egypt’s businesses”Moody’s Investor Services Statement18th January 2016
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“The move may increase investment and market liquidity and send a strong signal that the government is focused on building up its capital markets”
“In our view, this increases the likelihood of the government issuing USD3 billion in government- denominated bonds, of which USD1.5 billion was postponed in 2015”
“China supports Egypt’s efforts to maintain stability, develop the economy and improve livelihoods, and supports Egypt to play an even greater role in international and regional affairs”
Mohamed OmranChairman Of The Stock ExchangeAhram Online19th January 2016
CI Capital ResearchEgypt Daily17th January 2016
Xi JinpingThe Chinese PresidentReuters20th January 2016
The Central Bank of Egypt’s Governor announced that Egypt has paid USD700 million to Paris Club creditors, stressing its commitment of timely repayment to all external creditors. This debt payment is the first tranche of USD2.7 billion in dues to be repaid over 2016.
The Presidency spokesperson, Alaa Yousef, stated that Egypt is studying the offering of shares of a number of successful state-owned banks and corporations in initial public offerings in the near future, in a move aimed at enhancing investment and boosting economic growth. Egypt’s Central Bank Governor, Tarek Amer, added that concerning banks, there is the possibility of offering shares in two state banks via initial public offerings for capital increases which will decrease the government’s share by around 20% in each bank. He added that it would not include state bank giants National Bank of Egypt and Banque Misr and that the Central Bank may offer a stake in one of its ventures to a strategic investor.
The Egyptian Parliament has ratified around 323 laws and regulations issued by President Abdel Fattah Al-Sisi and the Interim President Adly Mansour since the previous parliament was dissolved in 2013. The ratified laws included the law immunizing the government contracts with investors from third party challenges, the terrorist entities law, the exercise of political rights law, along with other laws and regulations, while the civil service law was rejected by the majority of votes during the 20th of January session.
The Investment Minister, Ashraf Salman, stated that Foreign Direct Inflows to Egypt registered USD1.4 billion during the first quarter of the fiscal year 2015/16, compared to USD1.3 billion during the same quarter in FY 2014/15.The Minister expected further inflows during the rest of the year to hit USD8-10 billion where new investments will focus on the oil and gas, renewables, real estate and infrastructure sectors.
Egypt is expected to sign a USD1 billion loan deal with China during the Chinese President Xi Jinping’s visit to Cairo that started yesterday and is scheduled until the 22nd of January 2016.The loan will be directed to the Central Bank of Egypt to sustain official foreign reserves. Another two loan deals will be signed with the National Bank of Egypt and Banque Misr worth USD700 million and USD100 million respectively to finance forthcoming projects and support Small and Medium Enterprises.
Egypt is going to receive USD200 million from Saudi Arabia to finance Small and Medium Enterprises (SME’s) ,where the government will allocate USD32 million of the grant to SMEs in Sinai governorate and the rest will be directed to governorates with the highest unemployment rates
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EGYPT AT GLANCE
EXCHANGE RATES
TB’S AUCTION
EURO
17 Jan. 2016
17 Jan. 2016
21 Jan. 2016
21 Jan. 2016
USD
91 Days 11.534
266 Days 12.066
182 Days 11.783
364 Days 12.052
Sterling Pound
Auction Date
FX-AUCTION RATES
US $ 7.7301 7.7301
Auction Date
21stJan. 2016
21st Jan. 2016
21stJan. 2016 14th Jan. 2016
Average Yield %
YTD
Maturity
7.81 0%
0.2%
0% 0.1%6%
11.07 -4.9% -4.1%-1.6% -0.6%8.52 0.4% 0.3%0%
W/W Y/YM/M
YTDW/W Y/YM/M
STOCK MARKET
EGX 30 5,713.35 -15.5%-2.5% -42%
INTEREST RATES
Overnight Lending Rate 10.25% 9.75%
Overnight Deposit Rate 9.25% 8.75%
Previous**Current*
** at January 2015* at December 2015
Corridor Rate +50 bp9.75% 9.25%
+50 bp
+50 bp
3
-19.4%
* Average Buy & Sell Prices For ALEXBANK
5.006.007.008.009.00
10.0011.0012.0013.00
Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16
EGP per USD EGP per Euro EGP per Pound Sterling
4000
5000
6000
7000
8000
9000
10000
Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16
EG
X
EGX 30 EGX 70 (Rel.) EGX 100 (Rel.)
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Research ManagerHemat El Masry
Head of ResearchEmil Eskander
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