Banks looking forward to returns on debt instruments following Egyptian pound's flotation, raising interest by 3%

The average return on initial treasury bills increased by 3.6% and exceeded 20% following the CBE's decision

Banks operating in the Egyptian market are looking forward to the returns on treasury bonds and bills to be issued this week, which will define their final rate, following the flotation of the Egyptian pound and increasing returns by 3% on Thursday.
The Central Bank of Egypt (CBE) will offer on Sunday, Monday, and Thursday treasury bills and bonds worth EGP 24bn on behalf of the Ministry of Finance.
The tenders include treasury bills worth EGP 5.75bn with a maturity period of 91 days, bills worth EGP 5.5bn for 182 and 273 days, and bills worth EGP 6bn for 364 days.
The CBE will also issue treasury bonds worth EGP 1bn with a maturity period of five years, and bonds worth EGP 250m for 10 years, according to the government's plan for treasury bonds and bills, which was previously published in Daily News Egypt.
Prices of the first two tenders for treasury bills increased by 3.4% and 3.6% following the flotation of the Egyptian pound and increase in the interest rate.
The average return on the treasury bills that were proposed with a maturity period of 375 days hit 20.519%, compared to the 16.842% it registered before the CBE's decision. The highest rate of return on this tender recorded 20.6%, and the lowest rate was 16.5%.
The average return on treasury bills for six months also hit 19.52%, compared to 16.07% in the previous tender before the CBE's decision. The highest rate at Saturday's auction reached 19.6% and the lowest rate recorded 15.931%.
At the end of last week, Finance Minister Amr El-Garhy said that increasing the interest rate by 3% will not negatively affect the inflation of public debt, pointing out that the average interest rates of internal and external borrowing will increase slightly, especially given that the interest rates of external borrowing are low.
El-Garhy added that the average interest rates are still within safe limits, which do not lead to inflation of public debt.
Deputy Minister of Finance Mohamed Meit said that the liberalisation of the exchange rate and increasing interest rates by 3% will have a negative impact on the interest rates attached to local debt, expected to increase by 3%, noting that the interest rates of foreign debt will increase as well.