Egypt to issue $1.1 billion in T-bills

Egypt’s Central Bank (CBE) announced on Sunday that it plans to offer a US$1.1 billion one-year treasury bill at an auction on Tuesday, Reuters reports. The auction will be open to local banks and foreign financial institutions.

This follows a November 24 auction that sold $1.796 billion in one-year dollar denominated treasury bills. Originally, the bank announced plans to raise $1.75 billion. Average yields were 2.182 percent, down from 2.236 percent in the previous auction for dollar-denominated securities, held in June 2014.

Egypt has increasingly turned to the bond market to meet its financing needs. According to provisional data from the Central Bank, government bonds and notes accounted for $6.085 billion at the end of June 2014, equivalent to around 13 percent of Egypt’s total external debt of $46.067 billion. 

In June 2013, bonds made up $5.158 billion of Egypt’s foreign debt.

These figures are dwarfed by Egypt’s domestic bond debt. According to provisional CBE figures for June 2014, bonds and bills accounted for LE1.478 trillion (roughly $208 billion at official rates), more than 81 percent of Egypt’s gross domestic debt of LE1.816 trillion.

Issuing foreign currency bills and bonds allows the government to raise funds in dollars, which Egypt needs to finance imports and repay debt to creditors such as multinational oil companies and foreign governments. 

They also have to be repaid in foreign currency. Egypt’s foreign reserves have been in decline, dropping to $15.8 billion at the end of November.