September 10, 2018 / 5:35 PM / in 7 months

Egypt cancels second consecutive T-bond sale due to high yields

CAIRO, Sept 10 (Reuters) - Egypt cancelled its second consecutive treasury bonds auction on Monday after banks and investors demanded high yields on the debt, statements by the central bank showed.

The Monday sale was for five and 10-year treasury bonds worth 3.5 billion Egyptian pounds ($196.74 million) and attracted yields between 18.4 - 18.6 percent, according to two bankers involved who participated in the auction.

It was not immediately clear whether the finance ministry would auction off the bonds in a private sale like it did on Tuesday with a five-year bond also worth 3.5 billion pounds , and officials were not immediately available for comment.

“What the government is doing, cancelling these auctions due to high yields, is very logical. How can the government sell at these prices for 10 years? ... We want to shrink the budget deficit, not increase it. It’s best to focus on treasury bills in the coming period,” one banker who spoke on condition of anonymity told Reuters.

Egypt aims to reach an average interest rate on government debt instruments in the current budget of about 14.7 percent compared with 18.5 percent in the 2017-2018 fiscal year, which ended on June 30.

The Arab world’s most populous country needs around 715 billion pounds in its 2018-2019 budget, of which 511 billion are in the form of domestic debt instruments and the rest are external financing from the issuance of bonds and an IMF loan. ($1 = 17.7900 Egyptian pounds) (Reporting by Ehab Farouk; Writing by Nadine Awadalla, Editing by William Maclean)

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