The Central Bank of Egypt (CBE) will, on behalf of the Ministry of Finance, issue 26 tenders for treasury bonds (T-bonds) and bills (T-bills) worth EGP 185.25bn in August.
It comes as part of a government plan to borrow EGP 600bn from the local market during the first quarter (Q1) of fiscal year (FY) 2020/21. The auctions are also set to bridge the budget deficit.
Minister of Finance Mohamed Maait expected the budget deficit to rise to 7.8% in FY 2020/21 compared to about 6.3% in the basic scenario.
The minister also noted that debt as a percentage of GDP may reach 88% compared to 83% in the budget’s basic scenario, in the event of the continued repercussions due to the novel coronavirus (COVID-19). This would continue until the end of 2020, according to an earlier statement issued by the Ministry of Finance.
According to the government’s plan, the Ministry of Finance looks to issue 16 T-bill bids, worth EGP 154bn, alongside 10 T-bond bids worth EGP 31.25bn this August.
The validity of the T-bonds and bills on offer during August are set varied. They include: four bids for 91-day T-bills worth EGP 33bn; four bids for 182-day T-bills worth EGP 37bn; four bills for 273-day T-bills worth EGP 41bn; and four bids for 364-day T-bills worth EGP 43bn.
The government’s plan includes offering a two-year bond bid worth EGP 1bn, a two-year bond bid of EGP 8.5bn, and a two-year bid for bonds worth EGP 7.5bn.
The Ministry of Finance is also scheduled to offer seven-year bonds worth EGP 6.5bn, and a two-year bid of EGP 6.5bn. Additionally, it has introduced new 15-year bonds, with a second tender of these bonds set to be launched, also in August, with a value of EGP 1bn.
Banks operating in the Egyptian market represent the largest sector investing in treasury bonds and bills that the government offers periodically to cover the state’s public budget deficit.
These bonds and bills are issued through 15 banks that participate in the system of primary dealers in the primary market. These banks resell part of the bonds and bills on the secondary market to local and foreign investors, whether individual or institutional.