The government will launch treasury bonds and bills for EGP 105.25bn, including 16 bill tenders for EGP 99bn and 8 bond tenders for EGP 6.25bn.
According to a plan prepared by the Ministry of Finance and sent to banks, the ministry is expected to launch the bill and bond tenders for EGP 26bn this week, compared to EGP 27bn expected next week, EGP 26bn the week after, and EGP 26.25bn in the last week of the month.
The ministry launched four bill tenders this month for 91-day terms and the value of EGP 25.25bn, in addition to four tenders for a 182-day term of the same value. There were four more for a 273-day term for a value of EGP 24.25bn, and four more tenders for a term of 364 days and of a similar value.
According to the ministry, the government is expected to launch bond tenders for a three-year term and at a value of EGP 1.75bn, two five-year tenders for EGP 1.5bn, and two others for seven years and of the same value, in addition to two more 10-year tenders.
The government announced in early April 2017 that it plans to issue bonds and bills worth EGP 342bn during the second quarter of fiscal year (FY) 2016/2017 to finance the state’s budget deficit.
In FY 2015/2016, the government borrowed more than EGP 1.1tn through treasury bonds and bills, based on figures obtained by Daily News Egypt.
According to a system agreed upon by the government banks since 2004, named “Main Dealers”, the government launched treasury bills and bonds in the local market through 15 banks taking part in the system. These banks re-launch part of these bills and bonds to their clients, both foreign and domestic.
The government’s dependence on banks working in the local market is increasing in order to cover the state’s deficit that is expected to reach EGP 320bn by the end of this fiscal year.
After increasing the interest rate by the Central Bank of Egypt (CBE) by 2% in May 2017, the return prices on treasury bills and bonds increased over the past two weeks to unprecedented levels.
According to the ministry, the prices of return on 3-month bills range between 19% to 20.67%, the return on 6-month bills is 19.5% to 20.9%, and that of 9-month bills is 19.25% to 20.56%, while it is 19.20-20.799% on one-year bills.
As for the return on bonds, they range between 18.4-18.69% for three-year bonds; 18.75-18.79% for five-year bonds;18.3-18.84% for seven-year bonds; and 18.45-18.85% for 10-year bonds.