Banks and international and local financial institutions offered to invest €734.9m in T-bills in a bid put forward by the Central Bank of Egypt (CBE) on Monday in euros.
The CBE is offering T-bills worth €650m on behalf of the Ministry of Finance. This is the first time euro denominated T-bills are offered this year.
The CBE said it received 29 offers to cover the bid totalling a total of €734.9m, of which it accepted 24 offers worth €659m.
The interest rate granted to investors in those bills range between 1.75% and 1.80%, with an average of 1.797%, compared to 2.3% and 2.28% in a similar bid offered on 15 November 2016.
According to the CBE, these bills were put forward to cover an older bid offered on 23 August 2016 worth €651.9m and due for repayment on Tuesday 22 August 2017.
The CBE added that the new bills will mature in one year, specifically on 21 August 2018.
The CBE offered T-bills in euros on 28 August 2012, and the first return granted by the Ministry of Finance on these bills amounted to 3.25%.
The CBE allows subscription to the bills in euros for local banks and foreign institutions with a minimum subscription of €100,000 and its multiples.
Banks subscribe to bills in euros in the same manner as local currency, where each bank submits its bid to the CBE, indicating the amount with which it will subscribe in bills and the interest rate demanded. These bids are collected at the CBE, and it will then consider them and accept the suitable ones.
Banks operating in the local market rely on these bills to invest their liquidity in euros safely with the government, with an appropriate yield, in light of the lack of other investments for such liquidity. Exceptions include rare syndicated loans, or investment in global capital markets, with a low yield and many risks.
In a related context, CBE Governor Tarek Amer said that Egypt repays its financial dues regularly on an annual basis, noting that there are funds that are naturally renewed, such as the currency exchange agreement with China and a $2bn loan from a number of international banks.
Amer said in remarks after the meeting of the Economic Group on Monday that international banks had requested to renew a $2bn loan for five years.
He pointed out that there are no arrears owed to foreign companies operating in Egypt, noting that the CBE received requests from several companies worth $160m and paid them immediately.