Matein Khlaid
The supply glut in crude oil, the fragile geopolitics of the Levant, the Gaza wars, the thinnest sovereign credit spreads since the summer of 2006 have not ended the scramble to pick up MENA credit when the issuer is not a serial borrower/distressed credit and the bonds issue reflects improving political/economic fundamentals. The year ago, Oman and Bahrain provided some amazing opportunities for capital gains which I did my best to highlight in this post and my media columns in the Gulf.
The autumn of 2025’s highlight for me are the first Kuwaiti eurobond issue since 2017, after the cabinet finally approved the Public Debt Law last March. Algeria, a country that always fascinated me due to a boyhood literary crush on Albert Camus’s “L’Étranger” and Alistair Horne’s “A Savage War of Peace”, so vividly chronicled the existential tragedies of the 130 year old French Colonial project known as Algérie Française and its final spasm of blood letting in 1954-62. I have never had a chance to visit Algeria though have travelled extensively in Morocco, from Tangier to Essaouira and Rabat to Marrakesh. J’espère que ce sera bientôt!
Abu Dhabi engineered a spectacular milestone in the bond market with a 10-year Eurobond priced at a razor-thin 18 basis points over Uncle Sam IOUs/UST. Morocco’s status as the only investment grade sovereign bond issuer in Africa (S&P Global) was marred by the political turbulence in the ancient Maghrebi kingdom, which have thankfully died out.
Egypt’s dollar sukuks are no longer a no-brainer as they were to me in 2023 on the eve of a historic yield compression. I think the opportunity now lies not in Egypt’s dollar denominated offshore bonds/sukuk but in its lira Treasury bill as Umm Duniya is hot carry trade (aka Cairo/Fustat/Qahira Al Muizz, the fourth Fatimid Caliph of Islam and 14th Ismaili Imam Zaman. Abu Tamim lived and died a thousand years ago but his reign of tolerance, art and civilised values, the founding of Al-Azher University, the first bimaristan in North Africa still inspires me).
Egypt’s stature on the world stage soared after President Al Sisi hosted Trump and the Arab world’s heads of state at the recent Sharm El-Sheikh summit. President Trump was the chief guest and Prime Minister Shahbaz Sharif hailed the King Solomon of our time as a man of peace and renominated him for the Nobel Prize.
Egypt’s 1-year Treasury bills are a no-brainer for me as I believe financing has been secured for the next year from the IMF development banks, the EU and the major Gulf petrodollar hubs. Inflation peaked at 38% two year ago and has now fallen to a 40 year low of 12%, which current yields do not reflect. The EGP is finally no longer MENA’s post boy for FX hyper-volatility after a decade of currency crisis and Pharonic devaluations under IMF diktat. The smart money hedge funds have accumulated $40 billion in unhedged T-bills and are no longer afraid of policy risk even as two Fed rate cuts loom.
The Suez Canal toll revenues, LNG export volumes and FDI flows are inching higher. Global investor exposure to Egypt T-bills has surged 10 fold since 2023 when Abu Dhabi’s $38 billion Ras Al Hikma project was the ultimate sovereign imperatur. The central bank has embraced an FX free float as hard currency reserves build up. My strategy is to borrow the yen at low rates as the Takaichi-san will not allow the Bank of Japan to pivot to hard money even as CPI in the Empire of the Rising Sun exceeds the US CPI. My short yen-long Egypt pound T-bill idea promises 30%+ return potential if all the variables align with the stars, dear Brutus.
Field Marshal Sisi is the toast of the Trump White House and hailed as the Yield Marshal on Wall Street. My call? 2026 will be the year of the Two Field Marshals in the global bond market – Al Sisi in Cairo and Al Munir (the luminous one) in Islamabad. Yet while I am bullish on the Egyptian lira, I am bearish on the Pakistani rupee as long as the secessionist revolts in Baluchistan and NWFP do not end, which will just not happen as long as the two provinces get a RAW deal LOL!
The United States has given more than $50 billion in economic and military aid to Egypt since President Sadat visited the Knesset in Jerusalem and signed the Camp David Peace Accord on the White House lawn in 1979. Despite multiple wars, the peace treaty with Israel and Sisi’s campaign against extremist terrorism makes Egypt too big to fail for the US, Europe and the Gulf. After more than a decade of macroeconomic pain and FX Armageddon, the lira no longer has a black market rate and is deep-value for me at 48. I heed George Soros’s advice as I plot my Egypt strategy – the big money is made when things go from Godawful to just plain awful. Soros will be vindicated once again in the EGP T-bill souk even if my Egyptian friends do not bless this strategy. Maalish!
Also published on Medium.
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