Finance Ministry Fails To Sell T-Bonds On Egypt’s Rating Downgrade

The Egyptian Ministry of Finance failed to sell three-year treasury bonds worth EGP 500 million on Monday as banks demanded higher returns after Egypt’s sovereign credit rating was cut by Moody’s Investors Service.

The Ministry stated it offered T-bonds worth EGP 500 million, but it failed to sell them. The Ministry also sought to sell 91-day T-bills worth EGP 1.5 billion, but it only sold 91-day T-bills worth EGP 1 billion. The yields on the 91-day T-bills ranged from 12.252% to 12.999%, while the average return registered 12.868%.

Moody’s Investors Service downgraded Egypt’s sovereign foreign currency credit rating to Caa1 from B3 last Thursday, citing unsettled political conditions, and said risks of a default have increased.

The government relies on selling government debt instruments (treasury bills and bonds) to provide the required finance for the budget, but the rating downgrade made these instruments less attractive.