Egypt plans key steps to boost bond market
Cairo, January 29, 2010
Egypt plans a number of measures in 2010 to spur its bond trading, including reactivating its repurchase agreement (repo) market and introducing shelf registration and bond lending, an official said.
The government, which has expanded its borrowing dramatically in the past few years, has streamlined rules for both corporate and government instruments. It hopes to set up a secondary bond market this year.
'Creating an active and efficient primary and secondary bond market is crucial to improving access to finance for companies in Egypt,' Mohamed Farid, senior financial economist at the Ministry of Investment, told Reuters in an interview on Thursday.
'This should help (Egypt) achieve the targeted economic growth rate on one hand and lower the cost of borrowing on the other.'
The Egyptian Financial Supervisory Authority (EFSA) is working on amending its regulations governing the repo market to make it more transparent and liquid. To make this possible, it will issue a new standardised and simplified contract for repurchase agreements, Farid said.
'The government also wants to introduce bond lending on treasury bonds,' he added.
This would enable bondholders who want to hold bonds until they mature to lend them temporarily to other institutions who would like to trade them in the market.
Bond lending would help pave the way for a more active secondary market. The regulations ensure there will be no excessive risk-taking by financial institutions, Farid added.-Reuters