Central Bank of Egypt (CBE) has reportedly verbally instructed some banks to reclassify a part of their available-for-sale bonds and bills into held-to-maturity securities, in order to avoid these instruments from trading on the secondary market, bankers told Reuters on Tuesday. This move aims to shield banks’ bonds portfolios from an expected spike in interest rates, at a time where a likely sharp EGP devaluation is expected, which would push interest rates up in order to stabilise the currency. Once the bonds are reclassified, they would not be marked to market; hence, protecting the banks from a revaluation loss once benchmark interest rates hike. The CBE’s verbal instructions were conveyed to selected banks, both state-owned banks and private ones, based on the size of their bond portfolios with maturities ranging from three to 10 years and more, a banking official at a state-owned bank told Reuters. (Reuters)