Egypt's 5-, 10-year treasuries almost steady, confusing the market

Yields on Egyptian treasury bonds were little changed at an auction on Monday, a result that confused the market after the country's two biggest state banks raised their interest rates on savings certificates two days ago.

Bankers had expected yields in government debt to rise after Bank Misr and the National Bank of Egypt issued saving certificates with a 12.5 percent interest rate, a big jump from the average 10 percent at Egyptian banks.

Some bankers interpreted the moves as an effort by the central bank to use the state banks to prepare the market for change in policy at its meeting on Dec. 17. They speculated a hike in official interest rates or a big devaluation might be coming.

"It could be a set-up for an imminent devaluation or could be a set up for a coming hike, but what is clear is that whatever comes, most likely it will be an aggressive move," one banker said.

The average yield on five-year bonds rose marginally in Monday's auction to 13.167 percent from 13.163 percent in the previous auction on Nov. 2. The yield on 10-year bonds edged up to 15.373 from 15.367 percent.