Egypt is seeking to raise as much as 15 billion Egyptian pounds ($2.6 billion) in a record sale of Treasury bills, with bankers predicting yields will rise as foreign investors avoid the auction in the wake of deadly anti-government protests.
Banks that opened yesterday for the first time in more than a week are demanding yields on three-month local-currency bills 150 basis points to 200 basis points more than at the last sale on January 27, according to four of 15 primary dealers in Cairo. Local lenders have enough funds to buy all the debt, central bank Deputy Governor Hisham Ramez said in an interview today on Bloomberg Television.
“Banks are full of liquidity,” he said. The yields “will move up but not as high as people are expecting,” Ramez said.
A lack of international investor participation may further weaken the pound, which fell today to the lowest level since January 2005, according to UBS. Foreign investors, who hold no more than 8 per cent of all Egyptian bills, sold $1.7 billion of their holdings yesterday, pushing up yields 50 basis points, or 0.5 percentage point, Ramez said.
“I don’t see the possibility of foreigners coming in and buying in this market any time soon,” said Bhanu Baweja, global head of emerging-market fixed-income and currency strategy at UBS in London. “Every day that passes the economy and the pound will pay the price.”
Protests to unseat President Hosni Mubarak that began on January 25 have left about 300 people dead, according to United Nations estimates. They also disrupted the government’s financing programme as the central bank postponed the sale of 4 billion pounds planned for January 30 after raising 2.5 billion pounds on January 27. The average yields on the sale of 182-day bills jumped 40 basis points to a one-year high of 10.6 per cent in the last sale, according to data compiled by Bloomberg.