The biggest drop in Egypt’s borrowing costs since the start of protests that toppled former President Hosni Mubarak last year is fuelling speculation the government will sell longer-term debt to meet financing needs.
The average yield on one-year Treasury bills fell 15 basis, the most since January 2011, to 15.768 percent in an auction of 3.5 billion pounds ($580 million) of notes yesterday, according to central bank data on Bloomberg. Yields that had climbed to a record 16 percent last year fell yesterday after the central bank allowed lenders to free up more funds.
A lack of demand forced the government to cut the average maturity of its local debt to 1.3 years at the end of last year from 1.7 years in December 2010, according to Finance Ministry data. Egypt’s banks bore the brunt of government financing after foreign investors dumped local securities following the uprising that ousted Mubarak, while four credit rating cuts by Moody’s Investors Service effectively shut the country out of global bond markets.
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