Courtesy of Mish.
The violence in Egypt following the military overthrow of former president Mohamed Morsi continues to escalate. Over 800 are dead according to official reports, thousands dead according to other reports.
The stock market, bond market and credit markets have all responded. Credit Default Swaps (CDS) soared to 810, placing Egypt in the top-10 of countries likely to default on sovereign bonds.
Please consider Egyptian Stocks Fall Most Since June as Violence Sparks Protests
Egyptian shares fell the most in two months as Islamists called for more protests following a government crackdown that has left at least 800 people dead. Borrowing costs rose for the first time in seven weeks at an auction today.
The benchmark EGX 30 Index slumped 3.9 percent, the most since June 12, to 5,334.55 at the 1:30 p.m. close in Cairo.
Stocks slid as concerns of an escalation of violence grew following calls by supporters of former Islamist President Mohamed Mursi to continue demonstrations demanding his reinstatement. At least 173 people died in weekend clashes that followed the violent breakup of pro-Mursi protest camps on Aug. 14. The stock market closed Aug. 15 in the first unscheduled shutdown since January 2011, when it suspended trading for almost two months.
Yields Rise
Egypt sold 5.5 billion pounds at an auction of treasury bills today, with the yield on three-month notes rising 18 basis points from last week to 11.44 percent, according to central bank data on Bloomberg. The yield on nine-month bills advanced three basis points to 12.41 percent. Yields on both maturities had plunged 311 and 260 basis points, respectively, since the military deposed Mursi July 3. A 6.5 billion-pound auction, canceled Aug. 15 amid the unrest, will be held tomorrow, according to central bank data on Bloomberg.
Five-year credit default swaps, contracts which insure the country’s debt against default, climbed to 810 basis points, according to CMA data, ranking Egypt among the 10-riskiest credits in the world.
EU Considers Suspension of €5bn in Aid
The Financial Times reports EU to consider suspension of €5bn in Aid to Egypt
Brussels said it will “urgently review” relations with Egypt following an escalation in violence over the past week that has left EU leaders increasingly worried about the future of peace and stability in the Arab world.
EU officials said that the review was likely to recommend a suspension of various forms of aid and loans in total worth €5bn, which had been earmarked to help Egypt in its transition towards democracy following the popular revolution that ended the military regime of Hosni Mubarak two years ago. Suspension would require the backing of EU member states.
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