Egypt T-Bill Yields Drop After Saudi Arabia Pledges Support

Egyptian treasury bill yields declined at an auction today after Saudi Arabia said it plans to invest $500 million in Egypt’s T-bills and will give the Arab country another $500 million to finance its budget deficit.

The yield on three-month securities sold today fell 18 basis points, or 0.18 percentage point, to 12.431 percent from last week’s auction, the lowest level in more than a month. Egypt’s Finance Ministry sold nine-month notes at an average 13.625 percent from 13.636 percent last week.

Today’s T-bill auction is part of a plan to raise a record 170 billion pounds ($28 billion) this quarter. The country’s borrowing costs have risen to the highest levels in almost three years in the aftermath of the uprising that ousted former President Hosni Mubarak in February. Egyptian Finance Minister Hazem El Beblawi said last month he was in talks to draw investments from Persian Gulf governments to help reduce yields.

Egypt relies on weekly sales of government securities to fund its budget deficit, which is expected to reach 9.9 percent of gross domestic product in the fiscal year that ends in June 2012, according to Cairo-based EFG-Hermes Holding SAE. That compares with 9.5 percent for the year that ended last June.