Egypt's Dollar Bond Rallies on Bets 'Worst Is Over': Arab Credit

Aug. 3 (Bloomberg) -- Egypt's dollar-bond yields tumbled to the lowest level in more than six months as investors increased their bets that the country will return to stability after this year's popular revolt.

The yield on the 5.75 percent 10-year dollar bond maturing in April 2020 fell 24 basis points, or 0.24 percentage point, in July to 5.49 percent. The rate was 5.52 percent yesterday. The Egyptian debt outperformed bonds from countries such as Tunisia, Bahrain and Morocco that also experienced popular uprisings and political unrest, data compiled by Bloomberg show.

"The worst is over, full stop," Daniel Broby, London- based chief investment officer at Silk Invest Ltd., said in an Aug. 1 telephone interview. "There are still protests over the weekends, there is still an election to get through, there are still uncertainties, but when it comes to facing the precipice, that risk has gone away now."

Parliamentary elections that are scheduled following the ouster of President Hosni Mubarak pose no "major risk," said Michel Aubenas, who helps oversee about $5.5 billion at London- based Fischer Francis Trees & Watts.

Yields on treasury bills have declined from their highest levels since 2008 as economic growth slowed and ministers linked to Mubarak were removed. Mubarak, 83, stands trial beginning today on charges of conspiring to kill protesters. The cabinet changes and the trial were among demands of activists who camped in central Cairo for three weeks until the military dispersed them this week.