The Central Bank of Egypt (CBE) is offering local treasury bills denominated in U.S. currency, totaling $1 billion, with a maturity period of one year. This move comes after the CBE’s successful auction in January, where it received bids exceeding expectations.
The CBE’s action, scheduled today, will offer one-year treasury bills maturing on February 5, 2025. In January, the CBE received 31 bids amounting to $1.02 billion for a similar auction valued at $830 million. The CBE accepted 20 bids, totaling $850 million, with an interest rate of 5.149 percent. Despite some investors proposing returns of up to 6.25 percent, the CBE rejected these higher bids.
Both local and foreign banks and institutions are eligible to subscribe to the CBE’s dollar-denominated treasury bills, with a minimum subscription amount of $100,000 and multiples of that. The subscription process mirrors that of local currency bills. Hence, “main dealers” send requests to the CBE specifying the desired amount and interest rate. The central bank then collects and approves these subscription requests.
The interest rates on the CBE’s dollar-denominated treasury bills are subject to various factors. Global market rates for the U.S. dollar play a pivotal role, as do alternative investment options available to both local and foreign banks and institutions. Additionally, the country’s credit rating factors into the determination of interest rates.
As the CBE launches a new bid for $1 billion worth of one-year, dollar-denominated treasury bills, investor interest remains a key focal point. The CBE’s cautious approach, balancing investor demands with fiscal responsibility, will be closely observed in the context of evolving global economic conditions. Hence, the success of this auction will not only impact Egypt’s short-term fiscal strategy but will also provide insights into the resilience of its financial markets amidst global economic uncertainties.
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