Back to the complete issue
Wednesday, 12 September 2018

Egypt cancels second T-bond sale this month due to high yields

**#2 Egypt cancels second T-bond sale this month due to high yields: Egypt canceled a sale of EGP 3.5 bn worth of five- and 10-year instruments on Monday, according to central bank data, with sources telling Al Mal that high yields on demand were behind the decision. Investors reportedly requested yields ranging from 18.90-18.95%, with some even asking for returns as high as 19.10% and 19.25% for the longer-term offering, the sources also said, adding that the Finance Ministry is likely to resort to the National Investment Bank to arrange the financing it had intended to raise through treasury sales. Reuters also has the story.

Reax: “‘What the government is doing, cancelling these auctions due to high yields, is very logical. How can the government sell at these prices for 10 years? … We want to shrink the budget deficit, not increase it. It’s best to focus on treasury bills in the coming period,’ one banker who spoke on condition of anonymity told Reuters.”

Background: Rising yields — which had hit highs of 19.64% and 19.31% at a Sunday auction for three- and nine-month bonds — had prompted the government to cancel another T-bond sale last week amid reports from the Finance Ministry that it was working on drafting a comprehensive debt control strategy that could rollout as early as October and see government bond issuances limited to medium-to-long term offerings. The plan, which could also see FX-denominated bond sales scrapped this year, would also set limits on internal and external borrowing in a bid to push overall debt levels down to 91% of GDP from a current 98%. The country’s foreign debt levels at the end of FY2017-18 stood at USD 92.64 bn, up from USD 88.2 bn at the end of third quarter in March.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Etisalat Misr (tax ID: 235-071-579), the leading telecoms provider in Egypt; and Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt.