Yields edge down at Egypt T-bill auction

CAIRO: Average yields on Egyptian treasury bills inched down at a fully-subscribed auction on Thursday as investors continued to show optimism that the country would seal an emergency IMF loan and make a smooth transition to civilian rule, traders said.

The average yield on 182-day T-bills was 14.819 percent, down from 14.867 percent at the last auction. Traders said investors were showing appetite for maturities offering the prospect of greater returns than shorter-term notes.

The central bank sold 182-day bills worth 3.5 billion Egyptian pounds ($580.17 million) in a market where higher levels of available cash among banks has added to demand that pushed down yields in recent weeks from multi-year highs.

For 364-day T-bills, the average yield was 15.919 percent, down from 15.954 at the last issue on March 6, and the bank sold 3.5 billion pounds of the bills.

Demand was slightly weaker than at auctions last week that soaked up a lot of liquidity among the local banks who are the government's main lenders, traders said.

Traders said both bills offered on Thursday were in demand because their returns looked relatively attractive compared to shorter maturities.

The weighted average yield on three-month notes traded in Egypt's secondary market was 13.2 percent on March 13, compared to 14.7 percent for the six-month and 15.8 percent for 12-month T-bills, according to central bank data.

The debt market reacts only gradually to changes in Egypt's fiscal outlook because banks are under heavy pressure to offer a steady stream of funding to the government that has spent months fending off a budget and balance of payments crisis.

Copyright Reuters, 2012