Egypt 9-Month Yield Drops as Country Pitches Debt to Arabs

The yield on Egypt’s nine-month treasury bills dropped for the first time in almost six weeks after the country started talks with Persian Gulf governments on the sale of local debt. The yield on three-month notes rose.

The Arab country raised its targeted 6.5 billion Egyptian pounds ($1.1 billion) from the sale of three-month and nine- month securities at an auction today. The average yield on nine- month notes fell one basis point, or 0.01 percentage point, to 13.83 percent from a sale of similar-maturity bills last week. That’s the first decline since a sale on Aug. 15 and comes after the yield surged 86 basis points earlier this month. The rate on three-month notes advanced nine basis points to 13.024 percent.

“The Gulf has traditionally invested in equities, but Egyptian debt may be more appealing now with the decline in the stock market,” said Moustafa Assal, head of fixed-income at Cairo-based Beltone Financial Holding. “The financing needs of the government here are huge, so any decline in yields will be temporary unless other foreign investors return.

Egypt’s government is paying the highest yields in almost three years on local currency debt, which it sells weekly to finance the budget deficit. The average yield on one-year treasury bills climbed six basis points to 13.882 percent, the highest since November 2008, at an auction last week.