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Egypt Yields Fall at Sale, Bonds Rise on IMF Loan: Cairo Mover

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April 12 (Bloomberg) -- Egyptian one-year treasury bill yields fell the most in more than a year as the Finance Ministry said it will sign an agreement with the International Monetary Fund for a $3.2 billion loan by May 15. The dollar bonds rose.

The North African country sold 4 billion Egyptian pounds ($662 million) of one-year notes at an auction today, exceeding the targeted 3 billion pounds, at an average yield of 15.577 percent, according to central bank data on Bloomberg. The yield fell the most since unrest started last year and is down 15 basis points from the sale of similar-maturity bills last week. It also raised 2 billion pounds from six-month notes at 14.791 percent compared with 14.856 percent last week.

Egypt will sign a letter of intent with the IMF next week before the final agreement and has secured approval from the Islamists who control parliament, Finance Minister Momtaz el-Saieed told reporters in Cairo today. The IMF loan will provide an endorsement that enables the nation to secure funding from other donors and help meet financing needs of $10 billion to $11 billion over the next 18 months, he said.

“An IMF loan would stabilize the market and bring down yields,” said Nour Mohei-el-Din, assistant general manager for treasury at BNP Paribas Egypt. “Banks are also anticipating having more cash,” as the central bank implements next week a reduction in banks’ reserve requirement by 2 percentage points to 12 percent.

The finance ministry sold 4 billion pounds of nine-month securities yesterday at an average yield of 15.529 percent, down from 15.622 percent at the previous auction. It was seeking to raise 3 billion pounds.

The 5.75 percent dollar bonds due 2020 rose for the first time in eight days, pushing the yield 13 basis points lower to 6.98 percent at 2:20 p.m. in Cairo, according to prices compiled by Bloomberg. The rate jumped 29 basis points yesterday, the most since Dec. 13. The Egyptian pound was little changed at 6.0410 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