July 17 (Bloomberg) -- Egypt’s central bank sold the fewest seven-day repurchase agreements in more than four months as funding pressure eased following a cut in a key reserve ratio and the sale of longer-term repos. Dollar bonds rose.
The Arab country sold 13.6 billion Egyptian pounds ($2.2 billion) of the securities, the least amount since March 13, according to central bank data on Bloomberg. It had offered repos valued at 18 billion pounds. The agreements allow holders of government securities to sell them back to the central bank to access funds at 9.75 percent.
Yields on treasury debt have stabilized after reaching near-record levels last month after the central bank lowered the local-currency reserve requirement ratio for banks. The rate was cut on June 26 for the second time this year to 10 percent. The regulator also introduced 28-day repos last week, giving banks access to longer-term cash. The average yield on one-year bills has declined at the last three auctions to 15.83 percent, the lowest level in more than two months.
“The introduction of 28-day repos is helping provide more liquidity to the market, which is lowering demand for the shorter-term repos,” Alia Mamdouh, Cairo-based economist at investment bank CI Capital, said by phone. “It’s likely to keep repo sales in the near term below the record levels we saw recently.”
The sale of seven-day repos climbed to a record 37.9 billion pounds on June 12. The central bank started offering the agreements in March 2011 to address funding concerns for lenders as foreign investors dumped the country’s debt amid unrest that followed the ouster of Hosni Mubarak. It sold 321.1 billion pounds of the contracts last quarter, more than three times the amount from a year earlier.
The yield on the 5.75 percent dollar bonds due 2020 fell for the second time in three days, declining five basis points, or 0.04 percentage point, to 6.22 percent at 5:36 p.m. in Cairo, according to prices compiled by Bloomberg. The pound, subject to a managed float, was unchanged at 6.0649 a dollar.
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