Egypt Plans $4.6 Billion of Bonds in Quarter; Dollar Bonds Fall

Egypt plans to sell 27.5 billion Egyptian pounds ($4.6 billion) of treasury bonds in the next quarter, the most in a three-month period since the start of uprisings last year, as yields declined. Dollar bonds dropped.

The government will offer three-, five-, seven- and 10-year securities in the fiscal fourth-quarter starting April, according to a sale plan on the finance ministry’s website yesterday. Egypt seeks to raise a combined 150 billion pounds from the sale of bonds and bills in the period. It last sold 10-year notes in January 2011 at an average yield of 13.04 percent and sever-year notes to yield 16.88 percent almost two weeks ago.

The finance ministry halted the sale of treasury bonds after the start of the revolt that ousted President Hosni Mubarak more than a year ago to avoid paying higher yields. Rising borrowing costs forced the government to fall 14 percent short of the 170 billion pounds it planned to raise this quarter.

Yields on bills have leveled off in the past month, with rates on one-year securities dropping 21 basis points from 15.975 percent on Feb. 9, the highest since Bloomberg started tracking the data in 2006. The yields on the one-year notes had surged 518 basis points, or 5.18 percentage points, since the start of the demonstrations last year to 15.768 percent at an auction on March 22.

The central bank on March 20 reduced by two percentage points the local-currency reserve requirement for banks to help “ease credit conditions in the market.” The ratio now stands at 12 percent.

The yield on the 5.75 percent dollar bonds due in 2020 advanced 3 basis points to 6.41 percent at 12:40 p.m. in Cairo, the highest level since March 19, according to prices compiled by Bloomberg. The Egyptian pound was little-changed at 6.0375 a dollar.

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