The yield of treasury bonds for the five-year term launched by the Ministry of Finance on Monday increased by 0.82% in reaction to the Central Bank of Egypt’s (CBE) decision to increase the price of its basic yield by 1% on Thursday.
The yield of the ministry’s treasury bonds increased on Sunday for three-month and nine–month terms by approximately 1%.
The yield of the quintet bonds has increased to 16.31% for the lowest price, 16.53% for the highest price, and an average of 16.512% compared to 15.65%, 15.7%, and 15.684% respectively for previous bonds of the same term decided by the Finance Ministry before the CBE’s decision to increase interest rate.
The Ministry of Finance has launched the bonds at the value of EGP 2.5bn, to be due on 26 April 2021.
In the same context, the Finance Ministry has cancelled the treasury bond tender previously planned to be launched on Monday, worth EGP 500m for a 10-year term.
The CBE, which manages the issuance of treasury bonds and bills on behalf of the government, announced on Sunday the issuance of these bonds on its website. It also notified banks of the cancelation of the latter issuance.
According to an official in the treasury department in a governmental bank, the Finance Ministry preferred not to issue the bonds in order to prevent the interest rate on them from increasing for a long period of time, especially after the CBE’s decision to increase its interest rates.
The Finance Ministry has stopped issuing bonds for five-year terms two months ago. Last week, it issued the bonds for the a seven-year term worth EGP 500m, and the issuance was covered by an interest rate ranging between 16.08% and 16.20%, with an average of 16.161%, according to the official.
“This yield was welcomed by the ministry, which encouraged the re-launch of the 10-year term bond; however, the CBE then increased its interest rates which made the ministry undo the decision to issue the bonds,” the source said.
