The Ministry of Finance said on Monday that it had to reduce the amount of accepted purchasing offers for the two treasury bill (T-bill) tenders that were launched on Sunday, in order to avoid increasing the interest rates after the Central Bank of Egypt (CBE) raised basic rates 3% last Thursday.
The move aims to avoid increasing the public debt service, the ministry added.
The Ministry of Finance offered EGP 8bn worth of 91-day T-bills, for which it received about EGP 30.414bn worth of purchasing offers, with a return of about 22%. The ministry accepted only EGP 1.553bn worth offers, with a return ranging between 17.5% as the lowest price, 18.149% as the highest price, and 18.088% as an average, compared to 16.1%, 18.149% and 18.07%, respectively, in the previous similar tender.
The ministry also tendered another T-bill issuance worth EGP 20bn for 273 days, for which it received about EGP 17.795bn worth of offers, with a return of about 23.5%. The ministry accepted only about EGP 48m offers, with a return ranging between 18.699% as the lowest price, 18.851% as the highest price, and 18.821% as an average, compared to 18.5%, 18.87% and 18.8%, respectively, in the previous similar tender.
Last Thursday, the Monetary Policy Committee decided to raise the basic interest rates at the Central Bank by 3%, to reach 16.25% for deposits, 17.25% for lending, and 13.75% for the credit and discount rate and the price of the main operation.
Figures obtained by Daily News Egypt earlier revealed the Ministry of Finance’s intention to issue 27 tenders of T-bills and bonds worth EGP 270bn during December. It comprises 16 T-bill tenders worth EGP 217bn and 11 bond tenders worth EGP 53bn.
The banks operating in the Egyptian market are the largest sectors investing in bonds and treasury bills that the government offers periodically to cover the state budget deficit.
These bonds and bills are offered through 15 banks that participate in the system of “primary dealers” in the “primary market”, and those banks resell part of them in the “secondary market”, to individual and local and foreign institutional investors.