Bloomberg News

Egypt T-Bill Yields Fall on Aid Optimism; Bond Yield Rises

February 17, 2012

(Updates with analyst comment in fourth paragraph.)

Feb. 16 (Bloomberg) -- The yield on Egyptian treasury bills fell for the first time in four months and the nation, seeking foreign aid, met its fundraising goal as it prepared to present an economic plan to parliament.

The average yield on one-year bills fell one basis point, or 0.01 percentage point, to 15.965 percent, the first decline since a sale on Oct. 13, Central Bank of Egypt data on Bloomberg show. The six-month yield fell two basis points to 14.918 percent. The North African country sold a total of 7 billion ($1.2 billion).

Egypt’s financing needs have grown since last year’s popular uprising that toppled President Hosni Mubarak led to an outflow in foreign investment and foreign reserves tumbled to the lowest level since at least December 2004. The nation, in talks to secure a $3.2 billion loan from the International Monetary Fund, will give parliament details of an 18-month economic plan and notify the Washington-based fund once it’s approved, Planning Minister Fayza Aboulnaga said yesterday.

“Investors are in a wait-and-see mode for the arrival of international assistance and the banks realize they are getting a very generous rate on their investments,” said Mohamed Kotb, Cairo-based asset management director at Naeem Financial Investments. “Rates should stabilize then. If the government is able to secure external financing, the banking system will no longer have the upper hand and yields will decline.”

Egypt’s external financing needs amount to about $11 billion through June 2013, Minister of Finance Momtaz el-Saieed said Feb. 10.

Egypt’s 5.75 percent dollar bonds due in April 2020 retreated for a second day, pushing the yield up six basis points to 7.30 percent at 3:56 p.m. in Cairo, according to prices compiled by Bloomberg. The pound weakened less than 0.1 percent to 6.0382 a dollar.

--Editors: Daliah Merzaban, Claudia Maedler

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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