Central Bank of Egypt (CBE) sign. Photo courtesy of State Information Service website.
The issuance received high demand from investors, covering 110.1 percent of the issuance value, which sent a positive message of trust in the CBE’s securities.
The CBE sold the USD T-bills at an average yield of 5.15 percent.
“The CBE usually issues six US-denominated issuances yearly to cover the budget deficit. These issuances are attractive and offer low risk to investors and their yields are typically low,” banking expert Mohamed El-Beih told Ahram Online.
“USD T-bills are used to cover the foreign currency shortage and pay the debt service,” El-Beih added.
The average yield of one-year securities reached 5.1 percent on 4 December, according to the US Department of the Treasury.
The CBE has been taking various steps to increase its international reserve, amid a shortage in foreign currency that caused a discrepancy between official and parallel exchange rates of local currency.
The Egyptian government, in turn, announced a plan to collect $191 billion through 2026 by gradually expanding its initial public offering (IPO) program and introducing additional incentives for foreign investors, such as tax exemptions and golden licenses.
In November, the CBE auctioned $1.61 billion USD-denominated T-bills, the bank’s highest USD debt instruments offering (treasury bills and bonds) since mid-2020.
The bank issued €645 million in T-bills in November, after a €600 million issuance in August.
The CBE usually issues T-bills on behalf of the Ministry of Finance to finance the budget deficit.
Egypt’s budget deficit rose to 3.85 percent of GDP during the first quarter (July-September) of FY2023/2024, up from 2.05 percent in the corresponding quarter in FY2022/2023.
Despite the acute shortage in the USD, the country should pay $29.23 billion in external debt service in 2024, $19.43 billion in 2025, and $22.94 billion in 2026.
The country is under review for a $3 billion loan agreement with the International Monetary Fund (IMF). The review has been delayed multiple times, with no final date set yet.