Bloomberg News

Egypt Offers Bills as Scrapped Sale Fails to Stem Yield Rise

December 06, 2011

(Adds Egyptian pound in third paragraph.)

Dec. 6 (Bloomberg) -- Egypt plans to raise 10.5 billion pounds ($1.75 billion) in local-currency treasury bills over the next week after failing to curb record borrowing costs.

The Finance Ministry canceled the sale of six-month and one-year securities on Dec. 1 because investors demanded yields higher than 15 percent, two government officials with knowledge of the decision said at the time. Still, average yields on three- and nine-month securities climbed 9 basis points and 14 basis points, respectively to 14.348 percent and 15.084 percent at a Dec. 4 auction.

Yields on domestic debt are rising after a popular revolt ousted President Hosni Mubarak in February. The country is relying on weekly sales to fund 90 percent of its 134 billion- pound budget deficit in the fiscal year that started in July, the Finance Ministry said in September. Egypt’s currency has weakened 3.3 percent this year after foreign investment declined because of the unrest.

Egypt’s central bank said today a report in Al Shorouk newspaper that it may stop supporting the pound in the next few months is “incorrect,” said Nidal Assr, head of foreign reserve management at the central bank.

The currency gained less than 0.1 percent to 6.0015 a dollar at 3:31 p.m. in Cairo. Twelve-month non-deliverable forwards for the currency, which provide guidance to expectations, declined 0.4 percent to 7 a dollar.

The yield on Egypt’s 5.75 percent 10-year dollar bond due April 2020 was little changed, advancing less than one basis point, or 0.01 percentage point, to 6.95 percent.

The Arab country will seek bids for 3.5 billion pounds in one-year securities and 2 billion pounds in six-month notes on Dec. 8, according to central bank data on Bloomberg. It also plans to raise 3.5 billion pounds in nine-month treasury bills and 1.5 billion pounds in three-month debt three days later, the data show.

--Editor: Claudia Maedler

--Editor: Claudia Maedler

--Editors: Claudia Maedler, Shanthy Nambiar

To contact the reporters on this story: Ahmed A Namatalla in Cairo at anamatalla@bloomberg.net; Alaa Shahine in Dubai at asalha@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net


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