The Central Bank of Egypt (CBE) received 33 bids from local and foreign investors worth $1.0379bn to cover the recent tender of treasury bills (T-bills) denominated in the US currency.
The CBE put out this tender on Monday at a value of $850m for a period of 364 days, due on 3 January 2023.
The proceeds of this tender are intended to pay the maturity of a previous tender that the CBE launched on January 4, 2021, from which $861.1m were withdrawn.
Of those offers, the CBE accepted 27 offers worth $852.9m, with interest rates ranging between 2.97 – 3%. The bank rejected offers in which the required interest rate of 4%.
The CBE allows subscription to 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 treasury bills in the same manner as local currency bills. 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 then collected and decided upon by the CBE.
Banks operating in the local market rely a lot on these bills to invest their dollar liquidity in a vessel guaranteed by the government with an appropriate return in the absence of other investment aspects for that liquidity. Other options include rare joint loans that are offered on intervals or investing in global money markets.
The return of these T-bills is determined by 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.