Egypt Splits Investors Over Default Risk After Devaluations

JPMorgan Chase & Co. is taking three to six months to assess Egypt’s eligibility for its bond index after last week’s decision to place the country on negative watch as a result of the hurdles reported by sellers of government securities in repatriating foreign currency. A month earlier, Moody’s Investors Service said it was extending a review for downgrade of Egypt’s rating. 

But few have been indecisive for as long as the International Monetary Fund, almost a year after extending a $3 billion rescue package. The first review of Egypt’s program, expected in March, has yet to take place — a critical delay for a government that’s all but locked out of capital markets abroad and now unable to access the next tranche of its IMF loan.

Left without a playbook during one of the biggest selloffs in emerging markets, Egypt’s bond investors are agitating over whether the cash-strapped nation will be getting the money it needs, wary of committing capital to a country whose government spends nearly half its revenue on paying interest. Egypt meanwhile faces an estimated cumulative funding gap of more than $11 billion over the next five years, according to Goldman Sachs Group Inc.