Bond market offering 21% yields finally turns Egypt into a buy

Egypt is clawing itself back in favor with international investors after being shunned for more than six years, but it’s having to pay returns only eclipsed by Argentina.

The Egyptian Treasury bill market attracted more than $9 billion since the central bank allowed the currency to trade more freely in November, triggering a sharp devaluation and jump in interest rates. The country hasn’t managed to bring in that kind of money since 2010, before the Arab Spring revolution.

"If you’re an emerging market investor, you can come in and buy the world’s second-cheapest currency, offering very high yields and very low volatility; said Charles Robertson, global chief economist at London-based Renaissance Capital. “That’s extremely attractive."

Avoided by investors because of its overvalued currency and a distressed economy scrapping by on handouts from oil-rich Gulf neighbors, Egypt has quickly rebuilt a case for itself with the pound’s 50 percent devaluation, a five percentage-point increase in interest rates and an International Monetary Fund-backed plan to revive the economy.