Egypt Accepts Almost Double Last Week’s Repos as Yields Rise

Egypt’s central bank accepted 9.8 billion pounds ($1.6 billion) in bids for repurchase agreements today, almost double last week’s amount, after local-currency debt yields rose.

The contracts, or repos, allow government security holders to sell them back to the central bank for a week to access funds at a rate of 9.25 percent, according to Central Bank of Egypt data on Bloomberg. The regulator accepted all of the bids made and had offered 13 billion pounds of repos.

Egypt plans to raise 24.5 billion pounds in T-bill and bond sales this week, the most of any in the quarter. Yields on one-year and nine-month treasury bill advanced at the last auction to 13.85 percent and 13.84 percent respectively, near their highest levels since November 2008.

The country’s credit default risk rose for a third day after Moody Investors Service cut the country’s credit rating on Oct. 27 to B1, four levels below investment grade. Five-year credit default swaps climbed 25 basis points to 440, according to CMA. The data provider is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.

The central bank started the repurchase facility in March to ease pressure off local banks that became the primary investors in government securities after foreign investors withdrew amid the uprising that ousted President Hosni Mubarak the previous month. The interest rate paid by the banks on repo contracts hasn’t changed since the start.

Egypt’s 5.75 percent 10-year dollar bond due April 2020 slumped, lifting the yield 13 basis points, or 0.13 percentage point, to 5.78 percent at 5:14 p.m. in Cairo. The pound was little changed at 5.968 a dollar.

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