Yields eased as Egypt sold EGP 1.25 bn worth of treasury bonds yesterday, central bank data showed. Yields on both three- and seven-year T-bonds averaged 18.3%. Last week, Egypt had sold five- and ten-year bonds at yields averaging 18.41% on shorter-term offerings and 18.37% on the longer term. Yields on domestic debt have been nearing the 20% mark in recent months, straying far from an average 14.7% projected for the fiscal year, down from 18.5% in FY2017-18. The Finance Ministry had canceled four bond auctions in September and said that it would continue to do so if yields remain outside acceptable bounds. Sources had told us that a continued rise in yields could add as much as EGP 50 bn to Egypt’s debt service bill this fiscal year.

Background: The Finance Ministry is already moving to diversify its sources of funding by tapping the global debt market with FX-denominated issuances to counter rising yields on domestic offerings and is considering Asia for its next sale. Finance Minister Mohamed Maait had reported “very positive” results from meetings with Asian investors last week and said that the government would decide soon on whether it would issue ‘samurai’ and ‘panda’ bonds. We were told that the government is planning to issue as much as USD 20 bn in foreign-currency denominated bonds between now and 2022