Egypt scrapped a sale of nine-month treasury bills today, its first cancellation of a debt offering in more than three months, after Qatar agreed to deposit funds with the country’s central bank to boost foreign reserves.
The North African nation had offered nine-month notes valued at 3.5 billion pounds ($575 million), according to central bank data on Bloomberg. The average yield on the securities rose last week for the first time in six sales, gaining six basis points, or 0.06 percentage point, to 15.71 percent. Bids for the notes exceeded the amounts offered since sales were started in 2009. Egypt last canceled a sale in May.
Qatar, the world’s richest country based on per-capita income, agreed to deposit $2 billion with the central bank, Egyptian presidential spokesman Yasser Ali said yesterday. Egypt’s foreign reserves fell $1.1 billion last month to $14.4 billion, the lowest since Bloomberg began tracking them in 2004.
“Skipping an auction is normal within the central bank’s crisis-management tools,” said Moustafa Assal, managing director of Bondlink Advisory, a Cairo-based financial advisory firm that mostly trades government securities. “Qatar’s $2 billion gives the central bank some room to maneuver and it’s politically good for Egypt, but yields will resume increasing until there is more liquidity in the market.”
The regulator sold 1 billion pounds of three-month bills today yielding 14.2 percent, little changed from last week. The auction was part of a Finance Ministry plan to raise a record 175 billion pounds in the three months through the end of September.
The yield on the nation’s 5.75 percent dollar bonds due in 2020 advanced two basis points to 6.21 percent on Aug. 10. That’s near the lowest level since November. The pound was little changed at 6.0841 a dollar.
Egypt will receive $500 million of the Qatari funds by the end of the Islamic holy month of Ramadan and the rest by Sept. 15, Finance Minister Momtaz el-Saieed told reporters today.