Egypt Meets Debt Goal as Yields Fall; Pound Drops in August

Egypt sold the targeted 5 billion Egyptian pounds ($819 million) of treasury bills as yields declined after the nation’s currency posted the biggest monthly drop of the year.

The North African country accepted bids for 1 billion pounds of three-month notes and 4 billion pounds of nine-month securities, according to data on the Finance Ministry’s website. The average three-month yield retreated eight basis points, or 0.08 of a percentage point, from last week’s sale to 14.15 percent, the lowest since April. The nine-month yield decreased seven basis points to 15.79 percent.

The sales are part of a plan to borrow 52 billion pounds this month after the government raised 94 percent of its target so far this quarter. The Egyptian pound, subject to a managed float, weakened 0.4 percent in August, its third month of declines, to 6.1028 a dollar on Aug. 31, according to prices compiled by Bloomberg. That day it fell to as low as 6.1072 a dollar, the lowest since December 2004.

Egypt doesn’t plan to devalue the pound, President Mohamed Mursi told Reuters in an interview last week, becoming the latest government official this year to speak on the matter after similar assurances by Finance Minister Momtaz el-Saieed.

The yield on the 5.75 percent dollar bonds due in 2020 dropped three basis points to 5.43 percent on Aug. 31, taking the month’s decline to 104 basis points. That compares with a seven basis-point drop to 5.98 percent in the Middle East average, according to the JPMorgan Chase & Co.’s EMBIG Mideast Sovereign Yield Index.

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