The Central Bank of Egypt (CBE) will issue a tender for €690m worth of 364-day Euro-denominated treasury bills (T-bills), on Monday, which are due to mature on 9 November 2021.
The proceeds of the issuance will be used to pay the value of a previous bid put forward by the CBE on 12 November 2019, amounting to €695m.
The CBE launched the last Euro-denominated T-bills tender on 17 August 2019, with a value of €600m.
It said that it has received 35 offers, worth a total of €705.3m, to invest in this issuance from local and foreign financial institutions. Of this number 30, worth a total of €505.3m, have been accepted.
The interest rate accepted by the CBE in this bid stands at 1.410% as the lowest price and 1.45% as the highest price, with an average of 1.443%. Some institutions requested a return of 1.9%, which was rejected by the CBE.
The CBE had started offering Euro-denominated T-bills on 28 August 2012, and the first return granted by the Ministry of Finance on those bills was 3.25%.
It allows subscription for Euro-denominated bonds for local banks and foreign institutions, with a minimum subscription of €100,000 and their multiples.
Bank offerings on such T-bills are undertaken in the same way as the issuance of local currency T-bills, whereby each bank submits its bid to CBE. Banks have to provide an outline of the amount that will be subscribed to in the T-bills, with the interest rate that it requests. The CBE then studies and accepts or rejects the offers as appropriate.
Banks operating in the local market rely heavily on these T-bills as a method of investing their European currency liquidity in a container guaranteed by the government, and at a suitable return.
This comes in light of the lack of other investment opportunities of that liquidity, except for rare joint loans that are offered between separate periods, or investment in global money markets.