Egyptian Ministry of Finance and Euroclear Bank sign MOU

Brussels/Cairo/Washington – 12 April 2019 - Against the backdrop of the IMF/World Bank spring meetings, the Egyptian Ministry Finance (MoF) and Euroclear Bank have signed a Memorandum Of Understanding (MOU). Euroclear Bank and the MoF will work together to create the appropriate market conditions for local currency sovereign debt issuance. The intention is for the market to eventually become Euroclearable, creating a  cross border link to enable international investment  in  Egyptian domestic debt instruments.

Achieving Euroclearability will help the market expand its institutional investor base by  facilitating access to Egyptian government securities. It will also allow the market to sustain a single, powerful pool of liquidity, resulting in strong macro-economic benefits, which include a reduction in bond yields and an increase in the local liquidity of assets, which in turn creates a deeper, stable and larger domestic market. Through the Euroclear direct link, borrowing costs for sovereign debt issued by the MoF are therefore expected to decrease over time, thereby contributing to a better debt management strategy. The MoF sees this as  a long-term project, with the  MOU signing as the first step in achieving  the required market conditions for Egypt’s domestic debt instruments to become Euroclearable.

Dr. Mohamed Maait, Minister of Finance of Egypt stated: “The timing of this project launch is key. Egypt has shown significant progress in our economic reform program, which was clearly reflected in attracting more foreign investors and increasing confidence levels. This was manifested in the increased appetite of the international investment community for the Egyptian fixed income instruments that took place during the last two issuances of Egypt’s Euro-bond denominated in USD and in EUR, which were oversubscribed by 6 and 4 fold, respectively. This was in addition to the great demand for local currency T-bills and bonds from foreign investors that started to increase since the beginning of 2019."

Stephan Pouyat, Global Head of Capital Markets and Fund Services, Euroclear commented: “We are extremely pleased to sign this MOU with the Egyptian market, a true signal of Egypt’s intention to create a more robust capital market base. By widening the pool of available investors, Euroclearability can help enhance primary and secondary market liquidity, enabling corporates and governments to raise capital more efficiently or at lower cost.”

Note to editors

Euroclear group is the financial industry’s trusted provider of post trade services. At the core, the group provides settlement and custody of domestic and cross-border securities for bonds, equities and derivatives to investment funds. Euroclear is a proven, resilient capital market infrastructure committed to delivering risk-mitigation, automation and efficiency at scale for its global client franchise.

The Euroclear group includes Euroclear Bank - which is rated AA+ by Fitch Ratings and AA by Standard & Poor’s - as well as Euroclear Belgium, Euroclear Finland, Euroclear France, Euroclear Nederland, Euroclear Sweden and Euroclear UK & Ireland. The Euroclear group settled the equivalent of EUR 791 trillion in securities transactions in 2018, representing 230 million domestic and cross-border transactions and held an average of EUR 28.8 trillion in assets for clients.

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