Central Bank of Egypt auctions $1.6 bln USD T-bills

Ahram Online , Monday 13 Nov 2023

The Central Bank of Egypt (CBE) auctioned $1.61 billion USD-denominated treasury bills (T-bills) on Monday, reported the CBE website.

US Dollar bills. Stock Image.


The T-bills are to be repaid on 12 November 2024 at a yield that is yet to be announced.

This is the CBE's highest USD debt instruments offering (treasury bills and bonds) since May 2020.

The last USD T-bills issued by the CBE were on 6 June 2023 with a 364-day tenor. At that issuance, the central bank required $540 million and accepted $644.1 million in bids at an average yield of 5.27 percent.

According to the Federal Reserve Bank of St. Louis, the average yield of one-year US bonds is 3.3 percent.

On 7 November, the CBE auctioned €645 million in T-bills with a 364-day tenor. The central bank accepted €656.7 million bids at an average yield of 4 percent. According to the European Central Bank, the average yield of one-year Euro bonds is 3.5 percent.

Usually, the CBE issues T-bills on behalf of the Ministry of Finance to finance the budget deficit.

Egypt's budget deficit accounted for six percent of its GDP in the fiscal year (FY) 2022/2023, according to Minister of Finance Mohamed Maait. In the same fiscal year, the country's debt-to-GDP ratio reached 95.6 percent, with the GDP recording EGP 9.8 trillion ($318.23 billion).

Egypt’s external debt declined marginally to $164.73 billion during the fourth quarter of FY 2022/2023 from $165.36 billion in the earlier quarter.

The government has increased its budget deficit estimate to 6.9 percent of GDP for FY 2023/2024, which started on 1 July.

Egypt is coping with a shortage of US dollar liquidity in the local market and a financing gap estimated at $17 billion through 2026. The country has been increasing its efforts to fulfil its commitments to the IMF under the Extended Fund Facility (EFF) loan programme, approved in December 2022. 

Under the agreement, the government aims to decrease the gross debt-to-GDP ratio to approximately 83 percent by FY 2026/2027.

Egypt has recently bolstered its foreign currency reserves through the issuance of $1 billion in yen-denominated bonds in August and another $500 million in yuan-denominated bonds in October, with further yen-denominated bonds in the pipeline.

Under a loan agreement, the CBE secured ¥7 billion ($956.61 million) from the state-run China Development Bank.


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