Local and international organisations proposed investing $1.31bn in a treasury bills tender posed by the Central Bank of Egypt (CBE) on behalf of the Ministry of Finance on Monday.
The CBE accepted $1.1185bn of the liquidity offered to it, with an interest rate ranging between 3.66-3.72%—an average of 3.718%, versus 3.749% average interest posed in the last tender in November.
The CBE had posed this tender for $1bn with a maturity period of one year, due on 12 December 2017.
The interest rate on the US dollar bills is decided in accordance with a number of factors, most prominently the volume of the dollar liquidity in the market, the alternative investment opportunities available for the local and foreign financial institutions that invest in these bills, and the country’s credit rating.
The CBE started to offer treasury bills in US dollars on 30 November 2011, where the average interest rate on these bills in the first auction amounted to 3.87%.
The CBE allows local banks and foreign institutions to subscribe for the dollar bills with a minimum of $100,000 and its multiples.
Banks operating in the local market rely on these bills to safely invest their liquidity in euros with the government at 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.