Supervisor Elham AbolFateh
Editor in Chief Mohamed Wadie

CBE Issues T-bills Worth EGP 18.75 Bln

Sun 18 Aug 2019 | 11:55 AM
Ahmad El-Assasy

The Central Bank of Egypt (CBE) issued on behalf of the Ministry of Finance, treasury bills for maturities (91 and 266) days worth EGP 18.75 billion, on Sunday.

The CBE seeks to sell its offers of treasury bills for maturities of 91 days for EGP 9.25 billion and 273 days for EGP 9.5 billion.

The move comes to reduce the deficit in the state budget.

Noteworthy، a Treasury bill (T-Bill) is a short-term debt obligation backed by the Treasury Dept. of the U.S. government with a maturity of less than one-year، sold in denominations of $1،000 up to a maximum purchase of $5 million. T-bills have various maturities and are issued at a discount from par، according to Investopedia.

When an investor purchases a T-Bill، the U.S. government effectively writes investors an IOU; they do not receive regular interest payments as with a coupon bond، but a T-Bill does include interest، reflected in the amount it pays when it matures.

The longer the maturity date, the higher the interest rate that the T-Bill will pay to the investor.

-Purchase Process-

The pricing of T-Bills is unique among government debt issues; rather than providing interest payments like Treasury Bonds or Notes do، T-Bills are sold at a discount and the entire return is realized upon maturity.

The interest rate earned on T-Bills is equal to the difference between the purchase price and maturity value، pided by the maturity value.

New issues of T-Bills can be purchased at auctions held by the government; previously issued ones can be bought on the secondary market.T-Bills purchased at auctions are priced through a bidding process. Bids are referred to as "competitive" or "non-competitive."

A competitive bid sets a price at a discount from the T-Bill's par value، letting you specify the yield you wish to get from the T-Bill.Non-competitive bid auctions allow investors to submit a bid to purchase a set dollar amount of the Bills. The yield they receive is based upon the average auction price from all bidders.