Egypt Debt Riskier Than Iraq; Instability Spreads in Middle East
January 28, 2011 · Posted in Foreign Policy
To pick up on Government Collapses, Crises, and Protests Around the World …
Bloomberg reports Egypt Riskier Than Iraq in Swaps as Protests Spread to Mubarak:
Egypt is riskier than Iraq in the market for credit default swaps for the first time in at least a year after protests denouncing President Hosni Mubarak.
The cost of protecting Egyptian debt against default for five years with the contracts jumped 69 basis points, or 0.69 percentage points, this week to 375 today, compared with 328 for Iraq, according to prices from CMA, a data provider in London. Just last week, Iraqi swaps cost 19 basis points more than Egypt’s, and in June, an average 240 basis points more, as Iraq recovered from the U.S.-led invasion in 2003.
The unrest, inspired by the revolt that toppled Tunisia’s leader, “does raise political risks,” said Eric Fine, a portfolio manager in New York who helps Van Eck Associates Corp. oversee $3 billion in emerging-market assets. “If this is a revolution, the price of risk for Egypt could go much higher, and if it’s a failed one” the cost will drop to 300 basis points and probably 250, Fine said in a phone interview.
Higher borrowing costs may crimp Egypt’s ability to meet its target of cutting the budget deficit to 3 percent of gross domestic product by 2015 from the current 8 percent. Yields at the government’s debt auction climbed this week. The average rate on 91-day bills rose 30 basis points from the previous sale to 9.5 percent, while the yield on 182-day bills advanced 20 basis points to 10.2 percent, data compiled by Bloomberg show.
Here’s an anonymous message:
In addition it seems like something’s happening in Yemen …
Also on Thursday, thousands of protesters took to the streets of Yemen, one of the Middle East’s most impoverished countries, demanding the ouster of the 32-year-old American-backed government of Ali Abdullah Saleh, vowing to continue until the government either fell or consented to reforms.
… and in Algeria …
Algeria’s President Abdelaziz Bouteflika is considering high-level cabinet changed in hope of showing a reformist bent after the country was shaken by riots, people familiar with the matter said.
There is no clear timing for the changes, but one scenario under consideration would include the promotion of Energy Minister Youcef Yousfi to be the new prime minister, replacing current Prime Minister Ahmed Ouyahia, they said. Such a move could be part of a broader reshuffle aimed at replacing officials with ties to political parties with technical experts whose reputations remain intact after the protests.
… and last but not least there are some really impressive pictures here.