Egypt T-bill yields fall at $1bn auction

Egyptian Treasury bill yields retreated at an auction on Sunday after having shot above 13 percent last month, a level bankers said was more than the central bank had previously been prepared to pay.

Yields last month were the highest since the 2008 financial crisis, and traders said the government was leaning on dealers to lower their bids ahead of crucial bond sales in coming months.

The exposure of domestic banks to Egyptian government debt has been rising since Egypt’s political turmoil frightened away foreign T-bill buyers, and the banks have been demanding higher yields. Traders have warned yields could rise yet further if the government does not secure external budgetary funding.

Egypt’s central bank sold 6.5 billion Egyptian pounds ($1.09 billion) in domestic Treasury bills on Sunday, the same amount it had offered, the Finance Ministry said.

The average yield on the 3 billion pounds of 91-day T-bills it sold fell to 12.792 percent from 13.024 at last week’s auction. Last week’s yield was the highest since the 2008 global financial crisis.

On 3.5 billion pounds of 273-day T-bills, it fell to 13.759 percent from 13.842 at the last issue on Sept. 20.

“Traders agree that yields are currently very high and it seems they are willing to help the government out,” said one Cairo trader.

The government is expected to auction 5- and 7-year bonds worth 13.5 billion pounds in coming months and traders said it was preparing for the sales by stepping up pressure for lower Treasury yields.