Egyptian authorities to ramp up efforts to rejoin JPMorgan emerging market bond index

According to sources familiar with the matter, Egypt is accelerating its efforts to rejoin JPMorgan Chase & Co.'s Emerging Markets Bond Index (EMBI), a benchmark closely monitored by over $200 billion in emerging-market funds, reported by Bloomberg.

At the start of this year, Egypt was delisted from the index due to the foreign exchange shortage, which stalled overseas investors from converting their investments.

Egypt was delisted just one year after rejoining the index - Egypt had been working on returning to the EMBI for three years after its removal in 2011.

With a 12-month waiting period for re-inclusion, the next anticipated step involves JPMorgan potentially placing Egypt on its watchlist in the first half of 2025.

This would pave the way for a decision regarding the country's return to the index by the end of next year, although a re-entry in 2026 seems more plausible, the sources noted.

“JPMorgan needs to have strong confidence in the country’s financial indicators,” said one of the sources, who requested anonymity due to the private nature of the discussions.

In March, Egypt allowed the pound to depreciate approximately 40 percent against the dollar, and combined with the central bank’s increase of interest rates by 600 basis points to 27.25 percent, interest among carry-trade investors has grown.

Emerging-market investors are actively lobbying for Egypt’s re-inclusion in the JPMorgan index, explained Bloomberg, eager to capitalize on local-currency debt that they now view as attractively priced.

“Fears of an Egyptian default have faded, while yields on bonds have been exceeding 20 percentage points and the inflation-adjusted policy rate has turned positive for the first time in years, adding to bullish sentiments,” it wrote.