Egypt debt insurance costs down as fears ease


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The cost of insuring Egyptian debt fell dramatically yesterday in a sign that financial markets are growing less concerned about the implications of the political crisis.

The price on five-year Egyptian credit default swaps (CDS) fell 100 basis points. The swaps generally get more expensive when traders perceive more risk.

Insuring US$10 million (Dh36.7m) of Egyptian debt now costs $350,000, down from a high earlier in the week of $450,000.

Despite the declining swap rates, Moody's yesterday downgraded the ratings for five Egyptian banks, citing unrest in the country. The five banks were the National Bank of Egypt, Banque Misr, Banque du Caire, Commercial International Bank and Bank of Alexandria.

Hosni Mubarak, the president, said on Tuesday he would step down later this year, which was seen by traders as relieving some of the tension of recent days.

Some traders who had taken short positions in Egyptian CDS in recent weeks began to unwind them yesterday, which contributed to the fall in values.

But despite the drop in the cost of insurance, analysts predict plenty of challenges ahead.

Standard & Poor's yesterday became the third international ratings agency to downgrade Egypt's sovereign debt. S&P lowered the rating on Egyptian debt to "BB" from "BB-plus" and warned it could be cut further in the next three months.

Moody's Investors Service and Fitch Ratings also downgraded the debt in the past week as the civil strife peaked.

"If the political situation doesn't show signs of resolving, and certainly if the banks remain closed, then that's going to start to get more serious," said Richard Fox, the head of Middle East and Africa sovereign ratings at Fitch .

He said receiving information from the country remained difficult.

S&P noted that Jordan and Algeria were at the greatest risk of experiencing similar unrest.

"What we're seeing is to some effect contagion," said Kai Stukenbrock, the sovereign analyst for S&P. "Events in Tunisia have clearly encouraged people in Egypt to take to the streets, and the encouragement that people take from this can lead to some contagion.

"Whether this will lead to a domino effect in the region is a different question - a number of governments in the region have been relatively fast in acting proactively to lower food prices and increasing subsidies to alleviate the immediate economic pressure."

Mr Fox agreed. "I don't think you can just assume that you're going to have a domino effect from one country to the other," he said. "The fault lines are different in different countries."

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UK's plans to cut net migration

Under the UK government’s proposals, migrants will have to spend 10 years in the UK before being able to apply for citizenship.

Skilled worker visas will require a university degree, and there will be tighter restrictions on recruitment for jobs with skills shortages.

But what are described as "high-contributing" individuals such as doctors and nurses could be fast-tracked through the system.

Language requirements will be increased for all immigration routes to ensure a higher level of English.

Rules will also be laid out for adult dependants, meaning they will have to demonstrate a basic understanding of the language.

The plans also call for stricter tests for colleges and universities offering places to foreign students and a reduction in the time graduates can remain in the UK after their studies from two years to 18 months.

Gothia Cup 2025

4,872 matches 

1,942 teams

116 pitches

76 nations

26 UAE teams

15 Lebanese teams

2 Kuwaiti teams

While you're here
Tips for used car buyers
  • Choose cars with GCC specifications
  • Get a service history for cars less than five years old
  • Don’t go cheap on the inspection
  • Check for oil leaks
  • Do a Google search on the standard problems for your car model
  • Do your due diligence. Get a transfer of ownership done at an official RTA centre
  • Check the vehicle’s condition. You don’t want to buy a car that’s a good deal but ends up costing you Dh10,000 in repairs every month
  • Validate warranty and service contracts with the relevant agency and and make sure they are valid when ownership is transferred
  • If you are planning to sell the car soon, buy one with a good resale value. The two most popular cars in the UAE are black or white in colour and other colours are harder to sell

Tarek Kabrit, chief executive of Seez, and Imad Hammad, chief executive and co-founder of CarSwitch.com

The Pope's itinerary

Sunday, February 3, 2019 - Rome to Abu Dhabi
1pm: departure by plane from Rome / Fiumicino to Abu Dhabi
10pm: arrival at Abu Dhabi Presidential Airport


Monday, February 4
12pm: welcome ceremony at the main entrance of the Presidential Palace
12.20pm: visit Abu Dhabi Crown Prince at Presidential Palace
5pm: private meeting with Muslim Council of Elders at Sheikh Zayed Grand Mosque
6.10pm: Inter-religious in the Founder's Memorial


Tuesday, February 5 - Abu Dhabi to Rome
9.15am: private visit to undisclosed cathedral
10.30am: public mass at Zayed Sports City – with a homily by Pope Francis
12.40pm: farewell at Abu Dhabi Presidential Airport
1pm: departure by plane to Rome
5pm: arrival at the Rome / Ciampino International Airport