Egypt's Bond Yields Fall Below 16% for 1st Time in 3 Yrs

Bond yields continued to fall to the lowest level since the liberalization of the Egyptian pound, dropping below the 16 percent level.

According to the Central Bank of Egypt (CBE), the total value of issued treasury bills (T-bills) was EGP 21.3 billion for the maturity periods of 182 and 364 days.

The return on the 364-day period dropped significantly, during the day, to the level of 15.8 percent. The finance ministry aimed to sell EGP 9.75 billion worth of T-bills, however, it accepted more than it intended to trade, issuing EGP 12.05 billion, with an average return of 15.87 percent, the lowest level since the currency's liberalization.

As for the 182 days, bond s were sold at a value of EGP 9.25 billion, with an average of 16.38 percent, the lowest return since 2016.

The recent decline in the yield on Egyptian debt instruments has been driven by the central bank's easing of monetary policy and interest rate cuts on the back of lower inflation and a global cut trend amid fears from recession and trade tensions between the United States and China.

The CBE decided during its meeting in August, to cut the rates of deposit and lending overnight and the rate of the main operation by 150 basis points to 14.25 percent, 15.25 percent, and 14.75 percent, respectively.

The central bank cut interest rates for the second time this year last February at the level of 15.75%, 16.75%, and 16.25%, respectively. The bank then fixed rates during its previous meetings in March, May, and July.

Egypt's annual inflation rate continued to decline, reaching its lowest level since 2013, reaching 6.7 percent, compared to 13.6 percent in 2018, 33.2 percent in 2017, and 10.9 percent in 2013.