CAIRO: Yields on Egypt's Treasury bonds rose only modestly at an auction on Monday, shrugging off an official rate rise, and bankers said state banks had bid aggressively for the new debt to hold down government borrowing costs.
The bond auction, of 18-month, three-year, and seven-year debt, was the first since the central bank raised interest rates by 50 basis points on Thursday, citing inflationary pressures. .
That fuelled expectations that government debt yields would increase by at least 50 basis points and bankers were surprised on Sunday when yields at a sale of three and nine-month T-bills rose by less than 20 basis points.
At Monday's bond auction the average yield on Egypt's zero-coupon, 18-month bond rose to 11.993 percent from 11.844 percent at the last auction on Dec. 14, the average yield on the three-year bond rose to 12.663 percent from 12.521 percent and on the seven-year bond to 14.572 percent from 14.43 percent.
Bankers told Reuters earlier on Monday that state banks had informed them the yields would not rise by more than 20 basis points.
"It has been done before when state banks want to keep the auction yields under control," one banker said.
"They do that sometimes to inform banks that they will keep yields within (a range) so if the other banks want to be accepted they should stay within that range," he said.
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