The volume of investments of banks operating in the Egyptian market in treasury bills (T-bills) issued by the government increased 5% to EGP 650bn in March, up from EGP 618.9bn in February 2018, according to the Central Bank of Egypt (CBE).
In a recent report, the CBE stated that government banks’ investment in T-bills by the end of March 2018 reached EGP 33bn, private banks at EGP 279.8bn, and specialised banks at EGP 11.1bn, while foreign banks operating in Egypt invested EGP 26.1bn.
Banks have been the main sector investing in government debt instruments since 2004. The government issues T-bills and bonds through 15 banks named primary dealers, while the banks refloat these instruments for individuals and local and foreign institutions.
The CBE figures showed an increase in the volume of outstanding government T-bills by 5.6% in March 2018, scoring EGP 1.21tn, up from EGP 1.15tn in February.
Moreover, the CBE explained that foreign investments in T-bills at the end of March 2018 reached EGP 380.3bn, which is equivalent to 31.4% of the balance of total outstanding bills.
Foreigners’ investments in the Egyptian T-bills registered roughly $11bn before 25 January 2011 but declined to less than $25m at the beginning of 2016.
Foreign investments in bills came back strongly after the decision to liberalise the exchange rate in November 2016 and the increased interest on the pound.
Daily News Egypt revealed a few days ago the intention of the government to float bonds and bills worth EGP 475.5bn between July and September this year, making it the largest government debt instrument flotation in Egypt’s history.
A plan by the Ministry of Finance, obtained by DNE, revealed that the government is targeting issuing T-bills worth EGP 433bn and T-bonds worth EGP 42.5bn.
The CBE, which is carrying out the task on behalf of the government, is offering bids for T-bonds and bills, worth EGP 182bn in July, with another tranche of EGP 147bn in August and EGP 146.5bn in September.
According to the plan, the CBE will float 91-day T-bills worth EGP 108.25bn, 182-day bills of the same value, 273-day worth EGP 105bn, and 364-day bills worth EGP 111.5bn.
The government had borrowed about EGP 1.614tn through T-bills and bonds during fiscal year 2017/2018.
Between July and September 2017, the government borrowed EGP 371bn, aside from EGP 389.25bn between October and December 2017, EGP 415bn between January and March 2018, and EGP 438.75bn between April and June this year.