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Egypt sells $1.53 billion in dollar-denominated T-bills

In hope of easing upward pressure on rising yields, finance ministry sells $1.53 billion in dollar-denominated T-bills on Tuesday

Ahram Online, Wednesday 30 Nov 2011
Increasing Egypt's USD debt could prove troublesome if the local currency depreciates in the coming year (Photo: Reuters)

Egypt sold $1.53 billion worth of one-year, dollar-denominated ‎treasury bills on Tuesday with a weighted average yield of 3.87 ‎per cent, the Central Bank of Egypt (CBE) has announced.‎

The CBE had sought to raise $2 billion yesterday in its first ‎dollar-denominated issue this year. Yields on the accepted bids ‎ranged from 2.8 to 3.9 per cent. ‎

Egypt last sold dollar debt in April 2010, paying out 5.75 per cent ‎yields on ten-year Eurobonds.‎

Cairo-based investment bank Beltone Financial has said it ‎expects the latest move to ease upward pressure on yields for ‎domestic T-bills, which have surged to three-year highs in 2011.‎

‎"Banks will realise that there are other options for the ‎government to raise money and finance its deficit," Beltone ‎asserted.‎

The CBE has been recently tapping into its foreign currency ‎reserves to support the local currency, which fell to below LE6 to ‎the dollar following last week’s violent clashes in downtown ‎Cairo.‎

Beltone believes the finance ministry will have made the right ‎choice in issuing dollar-denominated bills if pressure on the ‎Egyptian pound eases in the coming year, as it pays much lower ‎yields on this debt than it does on its local currency-‎denominated counterparts.‎

However, if the Egyptian pound continues to depreciate and ‎Egypt’s Balance of Payments further deteriorate, pressure on ‎the country’s foreign reserves will intensify when the time comes ‎to repay the debt.‎

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