Egypt Offers $738 Million of Debt as Sinking Yields Boost Sales

Egypt will offer 4.5 billion Egyptian pounds ($738 million) of treasury bills today as the government takes advantage of the lowest borrowing costs in more than a year to raise funds to cover the budget deficit.

The North African country will sell 1 billion pounds of three-month securities and 3.5 billion pounds of nine-month notes, according to central bank data on Bloomberg. It sold similar-maturity bills at 12.4 percent and 13.35 percent last week.

Stronger demand for government debt on the back of increased political stability and foreign aid pledges helped reduce near-record one-year yields over the last month. The rate fell to a 12-month low of 13.59 percent at a Sept. 27 auction, helping the government raise 6 billion pounds of the notes, the most in a single sale since Bloomberg started tracking the data in 2006.

The government is seeking to raise 150 billion pounds at local debt auctions this quarter after selling 169.3 billion pounds in the previous three months, excluding 513.3 million euros ($660 million) in one-year treasury bills. The budget deficit for the year that ends in June may exceed the government’s target of 7.6 percent of economic output, Finance Minister Momtaz el-Saieed said last month. The ratio reached 11 percent last fiscal year.

The yield on the nation’s 5.75 percent dollar bonds due in 2020 increased 30 basis points, or 0.3 of a percentage point, last week to 5.82 percent on Sept. 28. The pound, subject to a managed float, retreated 0.1 percent to 6.0989 a 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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