Investment idea: Long Egypt Government bonds

Investment idea: Invest in local currency Egypt Government debt instrument yielding 16% + benefit from the currency comeback after a steep devaluation

Summary:

  • Last year Egypt enacted reforms required by IMF. IMF provided funding to Egypt
  • Further reforms laws are being enacted
  • As a part of the IMF lead reforms Egypt devalued its currency by 100%.
  • To balance its budget Egypt stopped fuel subsidies
  • Interest rates are around 16%
  • The Egyptian economy is benefiting from the reforms and is starting to recover
  • 16% yield represents a downside protection. If the economy improves part of the shock devaluation would reverse. An investor would make the 16% + a gain from currency uplift.

 

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s