CBE Offers EGP 3 Bln T-Bills As Government Prepares Budget

Egypt will offer EGP 3 billion ($497 million) of treasury bonds after the government formed a committee to audit the planned budget for the fiscal- year starting in July. Dollar bonds rose.

Ministry of Finance will seek bids for EGP 2 billion of three-year notes and EGP 1 billion of seven-year securities, according to Central Bank of Egypt data. The average yields on similar-maturity notes were at 16.16 percent and 16.91 percent, respectively, at their last auction two weeks ago.

Spending in next year’s budget is forecast at EGP 538 billion, while revenue is projected at EGP 377 billion. Ministry of Finance is aiming for a budget deficit of between 8.6 percent and 8.8 percent of economic output for next year, Finance Minister Momtaz El-Saeed said last month. This year’s gap is likely to reach 9.4 percent, he said in February.
Egypt relies on sales of domestic bills and bonds to finance its debt. Holdings of foreigners have plunged 93 percent to EGP 3.8 billion as of January from a year-earlier, according to CBE data.

The yield on the 5.75 percent dollar bonds due April 2020 retreated two basis points, or 0.02 percentage point, to 6.88 percent at 11:40 a.m. in Cairo, according to prices compiled by Bloomberg.

The Egyptian pound, subject to a managed float, was little changed at 6.0392 a dollar. Twelve-month non-deliverable forwards were unchanged at 7.5 a dollar. That reflects expectations for the currency to weaken 19 percent over the life of the contracts, Bloomberg reported.