Bloomberg News

Egypt Sells 39% Less Debt Than Planned at a Treasury-Bill

June 26, 2011

(Updates with analyst comment in third paragraph.)

June 26 (Bloomberg) -- Egypt raised less than two-thirds of its targeted 7 billion Egyptian pounds ($1.2 billion) at a treasury-bill auction today as three-month yields jumped the most since March.

The country sold 4.25 billion pounds of government securities, according to central bank data on Bloomberg. The average yield on three-month notes surged 33 basis points, or 0.33 percentage point, to 12.095 percent from last week’s auction. Nine-month bills yielded 12.983 percent on average, surpassing the rate on one-year notes for the first time since February. The government raised 750 million pounds through the sale of the 266-day notes, or about a fifth of what it planned.

“There is limited demand at the current market levels,” Khalil El-Bawab, director of fixed income at Cairo-based investment bank EFG-Hermes Holding SAE, said in a phone interview. “It’s clear that the Ministry of Finance is not willing to pay above 13 percent. Eventually if they don’t they won’t be able to finance all the issues.”

Egypt’s Finance Ministry met 44 percent of its goal at the last auction and failed to raise the target amount in the last 10 sales of one-year notes as local lenders demanded more return on the securities the government relies on to finance its widening budget deficit. The North African nation last week cut the budget deficit forecast for the fiscal year starting July to 8.6 percent from 11 percent in its draft spending plan.

Finance Minister Samir Radwan said yesterday the country doesn’t need to borrow from the International Monetary Fund and World Bank “at the moment” after the budget deficit cut. The two organizations had pledged as much as $7.5 billion to help the country’s economy recover following the uprising that ousted President Hosni Mubarak in February.

Egypt’s 5.75 percent 10-year dollar bond was little changed at 5.67 percent on June 24, as was the pound at 5.9602 per dollar.

--Editors: Claudia Maedler, Digby Lidstone

To contact the reporters on this story: Ahmed A Namatalla in Cairo at; Alaa Shahine in Dubai at

To contact the editor responsible for this story: Claudia Maedler at

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