CAIRO: Egypt’s central bank said it would offer $1.5bn in one-year dollar-denominated treasury bills at a November 26 auction, rolling over bills maturing from last year when it introduced the instrument.
The popular uprising in early 2011 deterred foreign investors, forcing the government to rely on domestic banks for finance.
A series of foreign loans in recent months has helped Egypt’s government shore up its finances, and one fixed-income analyst said the central bank should have little problem in finding buyers for the dollar T-bill.
The central bank also said that at auctions on Monday it had sold ¤640.2m ($813m) in T-bills and 1bn Egyptian pounds ($164m) in three-year bonds.
The dollar T-bills, which will be settled on November 27, effectively roll over $1.53bn in dollar T-bills that mature on November 26.
Economists say funds available at local banks are nonetheless limited and in the longer term a $4.8bn loan that Egypt is seeking from the International Monetary Fund will be crucial to the government’s ability to fund a deficit now running at about 11 percent of gross domestic product.
An IMF team negotiating the loan extended its stay in Cairo yesterday for a second time to try to conclude a deal, which Egypt’s prime minister said was close.
Credit default swaps on Egyptian debt rose by 3 basis points yesterday to a six-week high of 420 basis points because of the flare-up of fighting in the region,” traders said.
“Egypt still under pressure given the lack of progress towards any form of cease-fire in Israel/Gaza,” an emerging markets trader said.
Youssef Kamel, an analyst with Rasmala, said that as of August around 18.5 percent of all deposits in Egyptian banks were in foreign currencies.
“Banks may be encouraged to buy the issue as foreign currency deposits have not fallen markedly since the beginning of the year and given record low global interest rates,” he said.
The central bank said it sold more euro T-bills yesterday than the 400 million it had offered, and that the weighted average yield had fallen to 2.548 percent from the 3.245 percent at its first euro T-bill auction in August.
“Due to increased appetite by local and foreign financial institutions (the) Ministry of Finance accepted ¤640.2m,” the central bank said in a emailed statement.
The average yield at an auction on Monday of 1bn Egyptian pounds of 3-year bonds declined to 13.2732 percent from 13.413 percent at the last issue on November 6, with the central bank selling all the bonds it had offered.
Reuters
