CAIRO - Egypt's 10-year dollar bond rallied to the highest since January and credit risk fell after the Government said it would impose a capital gains tax of 10 per cent as part of its attempt to curb the deficit. The yield on the 5.75 per cent security due in April 2020 tumbled 11 basis points, or 0.11 percentage point, to 5.82 per cent, the lowest since Jan. 25. The cost of insuring Egyptian Government debt against default for five-years fell 21 basis points to 304, according to data provider CMA. Profits from capital investments, dividend payments, mergers and acquisitions and asset revaluations will be taxed, Finance Minister Samir Radwan told reporters on Wednesday. Egypt's deficit may reach 10.95 per cent of gross domestic product in the fiscal year that ends in June 2012 after a revolt that toppled president Hosni Mubarak in February hurt revenue from tourism and industrial output, Radwan said. "Any increase in taxes should help the government reduce the budget deficit which is a major concern for investors right now," said Moustafa Assal, head of fixed income at Cairo-based Beltone Financial. "Sooner or later they had to apply the capital gains tax, because they need to use all available means to raise funds."
