Yields fall at Egypt T-bill Sale

Egyptian treasury bill yields continued to decline at an auction on Thursday from their highest in at least a decade, helped by greater liquidity among banks and optimism that the country’s new president will work to stabilise a struggling economy.

Mohamed Mursi took office on June 30 after 16 months of turbulent military rule and already has his hands full trying to form a government and find a compromise with the generals over whether parliament should be disbanded.

If he succeeds, it could bring Egypt the political stability it needs to start tackling a state funding and balance of payments crisis and draw foreign donor funds to tide the government over until the economy recovers.

Support from Saudi Arabia, heftier repo offerings and the introduction of 28-day repos are bolstering the liquidity of local banks for now, ensuring they can keep funding the government’s budget deficit.

The average yield for 182-day paper fell to 15.324 percent from 15.421 percent at last week’s auction. The central bank sold all the 2 billion pounds ($329.95 million) it had offered on behalf of the finance ministry.

The 364-day yield declined to 15.825 percent from 15.943 percent at the last issue on July 3. The bank sold all the 3.5 billion pounds of that maturity it had offered.

“You can tell there was demand by the strong fall in yields over two auctions of over 20 basis points for the six-month bill,” said Youssef Kamel at Delta Rasmala.

He said the bid-to-cover ratio would be a more accurate indicator of demand when it appears in coming days, and that ratio was likely to be higher than last week because there were fewer bills on offer.

Reuters