Analysts and bankers said that most of the deposits of the Egyptian Suez Canal certificates due on September 4 will not come out of banks after the maturity date, but will be re-injected into new investment certificates, because the nature of the holders of certificates is not the type of risk in investment.
In 2014, the Suez Canal Authority raised more than 60 billion pounds ($ 3.61 billion) from offering investment certificates to Egyptians for five years and a return of 12% increased at the end of 2016 to about 15.5%, where it used its revenue to build the new Suez Canal and a number of tunnels.
Egypt allowed the purchase of investment certificates for Egyptians only from individuals, companies and Egyptian bodies (investment funds).
"Often 80% of the certificates due in September will be linked to new certificates, because most subscribers to the Suez Canal certificates are bank customers, not venture investors," Mona Mostafa, head of trading at Arab Online, told Reuters.
"A fraction of the value of certificates may enter the real estate sector."
In August 2014, Egypt announced plans to build the new Suez Canal alongside the existing 145-year-old canal as part of a multi-billion-dollar project aimed at expanding trade along the fastest shipping route between Europe and Asia.
Egyptian officials hope the new channel will raise annual revenues to $ 13.5 billion by 2023 from more than $ 5 billion now.
Egypt's Suez Canal revenues reached $ 5.7 billion in 2018, up from $ 5.3 billion in 2017.
"Do not forget that this week's interest rate meeting, although the majority expects a rate cut, the central bank may resort to stabilization to preserve the source of debt income to the government and to ensure that the Suez Canal funds are not in the hands of the people, which could raise inflation (increase consumption)."
The latest inflation data in Egypt, which is located in the single digits, provides enough room for the Central Bank of Egypt to start monetary easing when it meets next Thursday.
Last month, the central bank's monetary policy committee kept its key interest rates steady at 15.75% and 16.75% on overnight deposit and lending, respectively.
"The holders of Suez Canal investment certificates do not have the culture of investing in the stock market and their money is not the size they are allowed to invest in real estate, so I expect the certificates 'money to enter again when they are due in banks' savings vessels," a government bank analyst told Reuters on condition of anonymity.
"Although the interest rate is expected to decline at the next central meeting, this will not prevent the beneficiaries of investment certificates from reinvesting in certificates again because saving vessels are the best and safest place for them to invest."
* Banks are ready to absorb the liquidity of certificates
"The banks have savings vessels that are able to hold the available liquidity with the disbursement of the Suez Canal certificate," said Yahya Aboul Fotouh, vice-president of the National Bank of Egypt, the country's largest state-owned bank.
"The banks have savings vessels that can absorb the available liquidity," agreed Hussein Rifai, head of Suez Canal Bank.
"The Ministry of Finance will transfer the funds of the certificates to the banks according to their due dates, bearing interest deducted from the accounts of the Suez Canal Authority."
The issuing banks are National Bank of Egypt, Banque Misr, Banque du Caire and Suez Canal Bank.
Tarek Fayed, head of Banque du Caire, the third largest state bank, said his bank was "making marketing efforts to retain customers of the Suez Canal certificates by providing savings products tailored to their requirements."
The Suez Canal certificates attracted an unprecedented turnout from Egyptians, especially those over the age of 40 years, in addition to the demand of companies and government and private bodies.
"Most Suez Canal certificates will be used by the owners of the Suez Canal when they are due to buy new certificates," said Radwa El-Sewify, head of research at investment bank Pharos. "Only a small percentage may go for other investments that may be gold, real estate or go back under the tile like Jet."
Certificates of Suez Canal (t) Suez Canal (t) Investment certificates