Egypt Pays Record Nine-Month Yield as IMF Approach ‘Late’

Egypt’s nine-month treasury bill yields rose to the highest level in at least five years following an announcement that Finance Minister Hazem El Beblawi will seek International Monetary Fund help and as violence flared in Cairo.

The country sold 2 billion pounds ($334 million) of the 3.5 billion pounds it sought in nine-month securities at an average yield of 14.705 percent, the highest since Bloomberg started tracking the data in 2006. It sold its target 1.5 billion pounds in three-month notes as the yield surged 71 basis points, or 0.71 percentage point, to 13.491 percent, the highest level since September 2008, according Central Bank of Egypt data on Bloomberg.

Dwindling international reserves and foreign investment after the revolt that toppled former president Hosni Mubarak have forced the government to pay the highest borrowing costs in three years. The Egyptian government may ask the IMF for the $3 billion loan it rejected this year after domestic borrowing costs soared, El Beblawi, who is also the deputy prime minister, said Nov. 18.

“The government’s willingness to borrow from the IMF is coming at a late stage,” said Mohamed Kotb, Cairo-based asset management director at Naeem Financial Investments. “The government can afford to pay high yields for a while to come but it needs to look at other ways of raising money, not excluding a eurobond.”

Protests

Security forces used tear gas and rubber bullets to clear Cairo’s Tahrir Square yesterday, Al Shorouk newspaper reported. One protester was killed and 676 were hurt in the capital, A person protesting in Alexandria also died, the state-run Middle East News Agency said, citing health ministry spokesman Mohammed Sherbini. Thousands continued to hold a sit-in in the capital, protesting the use of force by police, according to images shown on state-run Nile News.

The yield on Egypt’s 5.75 percent 10-year dollar bond due April 2020 gained four basis points to 6.15 percent, the highest level in six months. Twelve-month non-deliverable pound forwards, or contracts that provide guidance to expectations over a set period, weakened to 6.995 against the dollar on Nov. 17, the weakest level since Feb. 18. The pound was unchanged on Nov. 18 at 5.9825 per dollar.

To contact the reporter on this story: Ahmed A Namatalla in Cairo at anamatalla@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

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