Egypt scraps T-bill sale, seen as bid to keep rates low

May 31, 2015 1:14 PM

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Egypt's finance ministry said it had cancelled an auction of LE3.5 billion ($573.8 million) of treasury bills planned for Wednesday, a move traders said was a message to the market that the ministry was intent on holding rates down.

Interest rates on Egyptian government debt have fallen from historic highs in recent weeks as optimism grows that Cairo will secure help for a struggling economy from the International Monetary Fund and other foreign donors.

But on Sunday, average yields on three-month and 266-day treasury bills sold at an auction edged higher, and the central bank sold fewer 266-day bills than it had offered .

T-bill buyers likely misinterpreted signals from the finance ministry and believed that rates were bottoming out, traders said, which in turn led the ministry to scrap Wednesday's auction.

"The finance ministry probably received bids at much higher yields than it is willing to accept, so I believe it is sending a firm signal to the market that it is not willing to accept higher yields at the moment," said Youssef Kamel, a securities analyst at Rasmala.


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