Bloomberg News

Egypt Seeks $1.1 Billion in Debt Sale Amid ‘Liquidity’ Concerns

February 03, 2012

Feb. 2 (Bloomberg) -- Egypt seeks to raise 6.5 billion pounds ($1.1 billion) in treasury bills today, with investment bank Beltone Financial expecting banks to demand higher yields on a scarcity of pound-denominated funds.

The Ministry of Finance plans to sell 3.5 billion pounds in one-year notes and 3 billion pounds in six-month securities, according to central bank data on Bloomberg. The yield on both maturities has risen to a record after foreign investors dumped Egyptian assets following last year’s revolt, leaving domestic banks to bear the brunt of government financing.

“There is a lack of liquidity in Egyptian pounds,” Moustafa Assal, director of fixed income at Cairo-based Beltone, said by phone. “It’s totally normal that the yield will increase. If the Ministry of Finance refuses these levels, there will be no buyers any more.”

The finance ministry raised 45.1 billion pounds, or 31 percent less than it had targeted, at auctions of treasury bills and bonds last month. The central bank started offering seven- day repurchase agreements in March to allow holders of government securities to sell them back to the regulator to access funds for a week. The central bank sold its 12 billion- pound offering of repos this week.

The pound fell 0.1 percent against the dollar to 6.0298 and the yield on Egypt’s 5.75 percent dollar bonds due April 2020 rose one basis point, or 0.01 percentage point, to 6.99 percent at 10:17 a.m. in Cairo.

--Editors: Claudia Maedler, Tim Farrand

To contact the reporter on this story: Alaa Shahine in Dubai at asalha@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net -0- Feb/02/2012 09:00 GMT


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