On Monday, the Central Bank of Egypt (CBE) will offer a treasury bill tender, worth $800m, for 364 days, due on 5 January 2021.
The proceeds of this tender are directed to pay off a previous tender entitlement, which was offered on 8 January 2019, at a value of $845.1m.
The CBE had issued the last bid denominated in dollars on 9 December 2019 with a value of $1bn, for a year, due on 8 December 2020.
The CBE received 35 offers from local and foreign investors at a value of $1.1746bn to cover this bid, of which only 25 offers valued at $1bn were accepted. The interest rate accepted by the CBE was 3.55% as the lowest price, 3.6% as the highest price, and 3.589% as the average, and other offers were rejected where the interest rate reached 3.9%.
In 2019, the CBE issued 6 bids for treasury bills in dollars, which earned about $6.1432bn.
It is noteworthy that the CBE allows subscribing to these bills for both local banks and foreign institutions, with a minimum subscription of $100,000 and its multiples.
The return on these dollar bills is determined according to several indicators, the most important of which are the amount of dollar liquidity in the market, alternative investment opportunities available to local and foreign banks and financial institutions, and the country’s credit rating.
The CBE had said earlier that foreign investments in Egyptian pound-denominated bills fell to EGP 242.2bn at the end of October 2019 against EGP 264.8bn at the end of September 2019.
Foreign investments in treasury bills increased during the first 10 months of this year by about $4.25bn, or 39.7%, compared to $10.7bn at the end of December 2018.
Before its recovery in 2019, Egypt lost about $10.8bn in foreign investments in treasury bills during the period from the beginning of April 2018 to the end of December 2018, according to CBE data.
These investments had reached about EGP 380.3bn ($21.5bn) at the end of March 2019.
Emerging markets were exposed to a wave of foreign investment exit from government debt instruments starting in April 2018, with the rise of the US dollar, and the growing concerns of the economies of these markets, especially after the crises of Turkey and Argentina, but the crisis slowed down in December 2019, and then reflected positive flows since the beginning of 2019 in a number of these markets.