The Central Bank of Egypt (CBE) will tender $1bn worth treasury bills (T-bills) on Monday, for a period of 364 days, due on 7 December 2022.
The proceeds of this tender are directed to pay the entitlement of a previous tender that the CBE put forward on 8 December 2020, through which $1bn was withdrawn.
The CBE received 33 offers from local and foreign investors worth $1.766bn to cover a similar bid that the bank put forward on 15 November 2021, worth $1.6bn.
Of those offers, the Central Bank accepted 28 offers, worth $1.616bn with interest ranging between 2.95% as the lowest price, 3% as the highest price, and 2.995% as an average, while the bank rejected other offers in which the required interest rate reached 4%.
The Central Bank allows subscription in these bills for each of the local banks and foreign institutions, with a minimum subscription of $100,000 and its multiples.
Banks subscribe to dollar bills in the same manner as in local currency bills, where each bank submits its bid to the CBE, indicating the amount to be subscribed to in the bills and the interest rate it requests. Bids are collected at the Central Bank for study and acceptance of the appropriate ones.
Banks operating in the local market rely a lot on these bills to invest their dollar liquidity in a container guaranteed by the government, with an appropriate return, in the absence of other investment aspects for that liquidity, except for the rare joint loans that are offered between separate periods, or investing in the global money markets.
The return of these dollar bills is determined according to several indicators, the most important of which are the volume of dollar liquidity in the market, the alternative investment opportunities available to local and foreign banks and financial institutions, and the country’s credit rating.