Egypt cancelled the scheduled auction of five and 10-year treasury bonds (T-bonds) on Monday for a fourth consecutive week, according to the Central Bank of Egypt (CBE) data.
Earlier in September, the CBE called off the auction of three and seven-year treasury bonds worth EGP 3.5bn. Additionally, the other two previous T-bond auctions, which were also for EGP 3.5bn each, had been cancelled after bankers and investors demanded high yields on the debt.
Following the previous auction cancellation, Ministry of Finance announced that the required return rates for the bonds exceeded the acceptable limits and that the rates did not reflect the good economic and financial performance or the improvement of Egypt’s credit rating, but were affected by risks associated with emerging markets.
“Until now our economy is able to deal with the consequences of this negative effect,” Egypt’s Finance Minister Mohamed Moeit said, commenting on the emerging market crisis on Wednesday.
Egypt aims to reach an average interest rate on government debt instruments in the FY 2018/19 budget of about 14.7% down from 18.5% in FY 2017/18.
Egypt has a funding gap of EGP 714.64bn in the 2018/19 budget, EGP 511.21bn of which are to be provided from domestic debt instrument and the remaining amount to be provided through foreign financing from the issuance of bonds and the IMF loan.