Egypt cancels third treasury sale this month
**#3 Egypt cancels third treasury sale this month: Egypt called off its third treasury bond sale this month, canceling an offering yesterday for three- and seven-year bonds worth EGP 3.5 bn, Reuters reports, citing central bank data. There was no official comment on why the auction was cancelled, but two previous sales met the same fate earlier this month after yields soared to highs of 19.64% and 19.31%, amid a wider emerging market sell-off. “The Finance Ministry has been cancelling the bond auctions for the past few weeks due to higher yields than they are willing to accept,” one banker told the newswire.
Softer demand for government treasuries could impact deficit reduction targets: Demand for Egyptian debt softened as the EM crisis deepened, sending up soaring as a result. Further outflows are also a possibility, pointing to even higher yields still, according to Bloomberg. This means that the Egypt needs to find a way to “keep its debt attractive or else it risks seeing its yields rise further, which would make the government’s plans to cut its deficit even more challenging,” says Pharos Holding’s Mahmoud El Masry.
But high yields may be just what the doctor ordered, Renaissance Capital MENA CEO Ahmed Badr told Bloomberg TV last week, noting that higher yields makes Egypt more attractive to investors at a time when EM investors are pulling out of other markets.