Egypt joins JPMorgan’s emerging market bond index

JPMorgan said in a research note that the Egyptian government had obtained approval to join its index of emerging market government bonds as of January 31.

Egypt will have an estimated weight in the index at 1.85%. The memo said that about 14 categories of government bonds denominated in Egyptian pounds, with a total value of $26 billion, qualify for the benchmark index. The average yield of these bonds is 14.9% with a duration of 2.9 years.

JPMorgan analysts said in April that Egypt’s local currency bond market would benefit between $1.4 billion and $2.2 billion if Egyptian bonds joined the index.

Egypt is also seeking to include its domestic debt in Euroclear, the largest European clearing house for the settlement of securities transactions. Finance Minister Mohamed Maait said last month that Egypt was still discussing some technical issues and hoped to join Euroclear within a few months, but not by an earlier target date of November.

The index team at JPMorgan put Egypt and Ukraine on a “positive index watch” in April, after a steady improvement in liquidity and investor access to local government bond markets.

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