Bloomberg News

Egypt Misses Debt Sale Target as Borrowing Costs Increase

February 06, 2012

(Updates with debt sale in first paragaraph.)

Feb. 6 (Bloomberg) -- Egypt, which plans to offer debt to nationals living abroad, sold 31 percent less of treasury bills and bonds than it sought today as yields rose.

The government raised 3.5 billion pounds from nine-month treasury bills at an average yield of 15.915 percent compared with 15.822 percent at an auction last week, central bank data on Bloomberg show. It sold 1 billion pounds of five-year bonds at an average rate of 16.82 percent compared with 16.7 percent at the last sale on Jan. 30. It canceled an offering of seven- year bonds, data show.

Egypt plans to raise at least $2 billion from the sale of Islamic bonds and certificates of deposits to Egyptians living overseas as the government seeks to reduce record borrowing costs, Finance Minister Momtaz El-Saieed said today. The offerings are planned to take place within two weeks, he said. The government had sought to raise 6.5 billion pounds at the auctions today.

The country raised 45.1 billion pounds from the sale of treasury bills and bonds in January, or 31 percent less than targeted, as investors demanded higher yields, forcing the government to curb its debt issuance. The nation has increased its reliance on local banks to finance its widening budget deficit as the unrest that toppled President Hosni Mubarak a year ago deterred foreign investors.

The yield on the 5.75 percent dollar bonds due April 2020 declined two basis points, or 0.02 percentage point, to 6.97 percent at 2:50 p.m. in Cairo, according to prices compiled by Bloomberg. The pound was little changed at 6.0330 a dollar.

--Editors: Claudia Maedler, Shanthy Nambiar

To contact the reporter on this story: Ahmed A Namatalla in Cairo at anamatalla@bloomberg.net

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


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