Egypt 

Economic and general news

Egypt’s net international reserves (NIR) increased by USD108m m-o-m in August to USD46.597bn from USD46.489bn in July, according to Central Bank of Egypt (CBE)’s data. Deposits not included in official reserves decreased by USD660m m-o-m in August to USD9.20bn, the data showed. (CBE)
Our Comment: Egypt received USD820m from the IMF in August, representing the third tranche of its USD8.00bn Extended Fund Facility (EFF). NIR increased slightly by 0.23% m-o-m in August, mainly from gold, while foreign currencies remained unchanged.

The Monetary Policy Committee (MPC) of the CBE decided to keep the benchmark overnight deposit and lending rates unchanged at 27.25% and 28.25%, respectively, it announced in a release. The CBE also maintained the rate of its main operation and discount rate unchanged at 27.75%, it added. Globally, economic growth remains broadly stable, albeit slightly below the pre-pandemic level. Monetary policy tightening cycles in advanced and emerging market economies have contributed to a decline in inflation worldwide, with select central banks continuing to cut interest rates as inflation approaches its target levels. The slight loosening in the policy stance is also motivated by downside risks to employment and economic growth. In the meantime, despite persistent geopolitical uncertainty, energy prices have slightly declined, but the outlook for commodity prices in general remains uncertain. Domestically, real GDP growth softened to 2.2% in 1Q24 from 2.3% in 4Q23. The softening is driven by declining public contribution to economic activity due to the impact of the Red Sea maritime trade disruption on the service sector. Moreover, the recent uptick in private economic activity was not sufficient to offset the decline in public economic activity. Updated leading indicators for 2Q24 indicate that real GDP growth has started to pick up and is expected to gradually recover as of FY24/25, following a marked slowdown in FY23/24. Nevertheless, real economic activity remains below potential, supporting the forecasted disinflation path over the coming period, and is projected to remain so until it converges towards its potential over the medium term. Meanwhile, the unemployment rate declined to 6.5% in 2Q24 from 6.7% in 1Q24, mainly driven by robust employment in the agriculture sector. Inflationary pressures continued to subside, as annual headline and core inflation edged downward for the fifth consecutive month to 25.7% and 24.4% in July, respectively. Despite persistent non-food inflation, the significant decline in annual food inflation continues to drive down overall inflation and reflects a contained inflationary impact. The recorded annual food inflation of 29.7% in July is the lowest in almost two years, reflecting the favourable base effect from the strong inflationary episode in 2023. Accordingly, the gradual unwinding of food inflation, along with the improvement of inflation expectations, suggest that inflation is currently on a downward trajectory. (CBE)

Egypt’s plan to import 3.8m tons of wheat in a tender is still valid, the minister of supply said. (Bloomberg)

Egyptian General Petroleum Corporation (EGPC) issued a tender for 17 LNG shipments for its floating import terminal at Ain Sokhna Port for winter and three more cargoes to be delivered to neighboring Aqaba Port in Jordan, to be delivered in 4Q24, according to unidentified sources familiar with the matter. Egypt is seeking the deliveries from October to December. (Bloomberg)

Italy-based Eni will increase natural gas production in Egypt by around 200 mcf/day by January 2025 by starting drilling three new wells in the Zohr natural gas field in the Mediterranean Sea next week at an investment cost of USD300m, according to an unidentified government official. The announcement comes after Egypt’s Minister of Petroleum’s visit to Italy on Tuesday, where the two sides agreed on accelerating the development of the wells in exchange for the Egyptian government’s commitment to regularly pay its monthly dues to Eni, and paying the overdue payments according to the agreed upon schedule, the source added. (Mubasher)

Abu Dhabi’s Mubadala Energy is interested in an oil and gas exploration auction by EGPC for 12 areas in the Mediterranean Sea and the Nile Delta, according to Mubadala Energy’s CEO. (Al Borsa)

Egypt’s FRA has amended the listing and delisting regulations of securities to enhance financial stability, according to the FRA’s board. (Hapi Journal)

The Egyptian government sold 6-month T-bills worth EGP50.6bn, with a bid-to-cover ratio of 1.80x, at an average yield of 29.256%, up from 29.036% previously, and 12-month T-bills worth EGP20.4bn, with a bid-to-cover ratio of 2.57x, at an average yield of 26.246%, slightly up from 26.241% previously, according to the CBE’s data. (CBE)

Company news

Qalaa Holdings (CCAP EY) | Taqa Arabia (TAQA EY): Qalaa Holdings (QH) has signed a debt settlement agreement with Banque Misr, Banque du Caire, Arab African International Bank (AAIB), and Al Ahli Bank of Kuwait-Egypt whereby QH settles the entirety of its debts for a total of EGP4.55bn through 1) selling its 239m shares (17.7%) in Taqa Arabia with Qalaa retaining the right to repurchase those shares within five years, and the banks having the right to resell those shares to QH in the sixth year, 2) giving a registered 60,127 sqm land plot overlooking the Nile in the El Tebbin area, and 3) compensations for variations in the exchange rate and stock prices, it announced. Moreover, QH and its related companies signed a debt restructuring and settlement agreement with the AAIB where QH will pay around USD184m over installments from 2024 to 2033 at an annual variable interest rate equal to the Secured Overnight Financing Rate (SOFR). AAIB will also benefit from an enhanced security package, it added. These agreements will serve to reduce QH’s liabilities and interest expense and result in capital gains, which will reflect positively on QH’s financial statements, it added. (EGX)

Egypt Aluminum (EGAL EY): The company’s annual electricity bill will increase by EGP1.4bn to EGP7.4bn following the recent price increase in electricity prices to the industrial sector, an increase of c23%, according to unidentified sources familiar with the matter. The company will pay EGP1.50/KWh (EGP1.60/KWh of which the Ministry of Finance bears EGP0.10/KWH) instead of EGP1.22/KWh previously, an increase of EGP0.28/KWh, the sources added. Each EGP0.01 increase in electricity price increases the company’s annual electricity bill by EGP50m, the sources also said. Electricity prices for the industrial sector increased last month to EGP1.60/KWh from EGP1.32/KWh for ultra-high-voltage usage, to EGP1.74/KWh from EGP1.42/KWh for high-voltage usage, and to EGP1.94/KWh from EGP1.48/KWh for medium-voltage usage. (Al Borsa)

Cairo Housing (ELKA EY) | Pioneers Properties (PRDC EY) | United Housing and Development (UNIT EY): On 4 September, Cairo Housing submitted to Egypt’s Financial Regulatory Authority (FRA) its mandatory tender offer (MTO) to acquire up to 133m of United Housing and Development shares, which represent 50.9% of its total shares, through a share swap, to increase its stake in it to 90%, Egypt’s FRA announced. Some 399m Cairo Housing shares will be swapped with United Housing shares at a ratio of three shares of Cairo Housing shares in return for one share of United Housing. The FRA is reviewing the MTO. (EGX)

Fawry for Banking and Payment Services (FWRY EY): A block trade was executed on some 11.2m company shares worth EGP34.7m for its employee stock ownership program (ESOP), according to EGX data. (Mubasher)

Gadwa for Industrial Development (GDWA EY): The company bought some 100,000 treasury shares during the 4 September trading session, it announced. (EGX)

Pioneers Properties (PRDC EY): The company bought some 250,000 treasury shares during the 4 September trading session, it announced. (EGX)

UAE

Company news

Abu Dhabi Commercial Bank (ADCB UH): Fitch affirmed the bank’s long-term issuer default rating at A+, while its outlook remained ‘Stable’, Fitch announced in a statement. (Bloomberg)

Al Yah Satellite Communications (YAHSAT UH): The company’s board recommended a 1H24 DPS of AED0.840. it announced. (Bloomberg)

Saudi Arabia

Company news

Bank Al Bilad (ALBI AB): The bank’s board proposed a 1H24 DPS of SAR0.50, it announced. (Bloomberg)

Advanced Petrochemical Company (APPC AB): The company’s CEO Al-Juraish resigned as acting CEO for personal reasons, but will remain as managing director, it announced. (Bloomberg)

Saudi Automotive Services Company (SASCO AB): The company’s board recommended a 1H24 DPS of SAR0.025, it announced. (Bloomberg)

Kuwait

Company news

Agility Public Warehousing Company (AGLTY KK): The company’s subsidiary, Tristar, is engaged with advisers to evaluate options for shareholders, including soliciting interest for a stake in the company, it announced. (Bloomberg)

Ahli United Bank (AUB KK): The bank is issuing a USD300m PerpPNC5.5 Reg S AT1 6.5% at a spread of 292.5 bps, it announced. (Bloomberg)