Yields On Egypt 3-Year, 7-Year Bonds Dip Despite Turmoil

 Yields on Egyptian bonds tumbled at an auction on Monday, following a steady decline in yields of short-term debt since the army ousted Islamist President Mohamed Mursi on July 3.

The average yield on three-year bonds slid by more than one percentage point to 13.76 percent from 14.78 percent at the last auction on July 29.

The yield on the seven-year bond declined to 15.02 percent from 15.75 at the last auction.

The central bank said it accepted bids worth 1 billion Egyptian pounds for the three-year bonds and 1.5 billion pounds for the seven-year bonds. It sold the entire amount it had offered.

‘Investors remain optimistic and appetite is strong for longer dated issues,’ said one Cairo-based fixed-income trader.

‘It seems that the market is not giving much weight to the current short-term risks,’ he added.

Thousands of Mursi’s supporters remain defiant in fortified protest camps in anticipation of a crackdown. Authorities are keen to end the sit-ins but risk more bloodshed and turmoil if they resort to force.

Last week, yields on 10-year Egyptian treasury bonds slid to their lowest in 30 months and treasury bill yields dropped for the fifth week in a row.

‘Today’s drop is just a continuation of the rally taking place,’ the trader said, adding a recent central bank rate cut continued to boost investor appetite.

Egypt’s central bank had unexpectedly lowered its main overnight interest rate by 50 basis points at a policy meeting on Aug 1, saying it was more concerned about boosting growth than taming resurgent inflation.

Source : Reuters

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