Egypt’s central bank sells $1 bln in 1-year dollar T-bills

The Central Bank of Egypt (CBE) has announced it sold $1 billion in one-year dollar-denominated Treasury bills with an average yield of 2.995%.

The Central Bank of Egypt, on behalf of the Ministry of Finance, said on Monday, 6 December, that it sold $1 billion in treasury bills (T-bills), reported Reuters.

The T-bills were offered in one installment, with a 364-day term.

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to pay the entitlement of a previous tender that the CBE put forward on 8 December 2020, through which $1bn was withdrawn.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.

Earlier, the Ministry of Finance announced the possibility of reducing the accepted quantities of bills and bonds bids on the public treasury, issued in local currency until the end of the current fiscal year.

For the current fiscal year, the budget deficit is estimated to record 6.6 percent of gross domestic product (GDP), planned by the ministry to be financed through treasury bills and bonds and through international and Arab loans.

The Monetary Policy Committee of the Central Bank of Egypt (CBE) decided Thursday, Oct. 28, to keep the overnight deposit rate, overnight lending rate, and the rate of the main operation unchanged at 8.25 percent, 9.25 percent, and 8.75 percent, respectively. The discount rate was also kept unchanged at 8.75 percent.

$3 billion Saudi deposits

To support the foreign exchange reserves at the Central Bank of Egypt, the Saudi finance ministry announced on 31 October that the Kingdom had deposited $3 billion with the CBE and extended the term of another $2.3 billion in previous deposits.

“The Kingdom recently placed a deposit worth $3 billion at the Central Bank of Egypt (CBE), in addition to extending the term of the existing deposits of $2.3 billion,” the ministry said in a statement

Saudi Arabia as of end-March had long-term deposits with Egypt’s central bank of $5.5 billion, CBE data showed.

The Saudi statement appeared to suggest the total size of its Egypt deposits had changed little since then.

In late December, Saudi Finance Minister Mohammed al-Jadaan told Al Arabiya TV the kingdom’s latest deposit in the Central Bank of Egypt was for the long-term.

“The Kingdom is one of the main countries that supported the foreign reserves of needy countries during the pandemic,” the Saudi statement said.