Bloomberg News

Egypt Offers Fewest 7-Day Repos in 2 Months; Dollar Bonds Gain

July 17, 2012

Egypt’s central bank will offer the fewest seven-day repurchase agreements in two months as funding pressure ease following a cut in a key reserve ratio for banks and the sale of longer-term repos. Dollar bonds advanced.

The Arab country will make available 18 billion Egyptian pounds ($3 billion) of the contracts, the least since May 8, according to central bank data on Bloomberg. The repos allow holders of government securities to sell them back to the central bank to access funds at 9.75 percent.

Yields on treasury debt have stabilized after reaching near-record levels last month after central bank’s lowered the local-currency reserve requirement ratio for banks. The rate was cut on June 26 for the second time this year to 10 percent. The regulator also introduced 28-day repos last week, giving banks access to longer-term cash. The average yield on one-year bills has declined at the last three auctions to 15.83 percent, the lowest level in more than two months.

The central bank started offering seven-day repos in March 2011 to address funding concerns for lenders as foreign investors dumped the country’s debt amid unrest that followed the ouster of Hosni Mubarak. It sold 321.1 billion pounds of the contracts last quarter, more than three times the amount from a year earlier.

The yield on the 5.75 percent dollar bonds due 2020 fell for the second time in three days, declining three basis points, or 0.03 percentage point, to 6.24 percent at 12:15 p.m. in Cairo, according to prices compiled by Bloomberg. The pound, subject to a managed float, was unchanged at 6.0646 a dollar.

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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