Yields drop at Egypt auction of 3-year bonds

Reuters, Monday 8 Oct 2012

Egypt sells $164 million worth of three-year bonds with an average yield of 14.0571 per cent

Yields fell at an auction of LE1 billion ($164 million) of reopened three-year bonds on Monday, data from the Ministry of Finance showed.

Bond and T-bill yields have been dropping since the middle of the year, although some yields have nudged up at recent T-bill auctions as investors await the outcome of government talks with the IMF on a $4.8 billion loan.

The International Monetary Fund facility is viewed as vital to staving off a balance of payments and budget crisis.

The average yield on the reopened three-year bonds that mature on 9 October, 2015, was 14.0571 per cent. Three-year bonds sold on 10 September had an average yield of 15.85 per cent.

Some investors have been encouraged by the more stable political scene since the summer election of President Mohamed Mursi and by his government's promise to rein in a bloated subsidy system, although action on that is still awaited.

Gulf states and Turkey have provided or pledged aid to support Egypt's economy, also boosting confidence.

Settlement for the three-year bonds will take place on 9 October. Government bonds are sold by the central bank on behalf of the Finance Ministry.

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