The Central Bank of Egypt (CBE), on behalf of the Ministry of Finance, will float €675m treasury bonds (T-bonds) on Monday.
According to a statement received by banks operating in the local market, the bonds will mature in 364 days with a due date on 12 November 2019.
According to the CBE, this auction is available for all Egyptian banks and global financial institutions with a minimum of €100,000.
The last euro-denominated T-bonds floated by the CBE were in 16 August 2018, worth €610m.
Banks, international and local financial institutions offered to invest €757.8m in this auction, of which CBE accepted €617m.
The interest rate obtained by international and local financial institutions in exchange for their investments in these bonds registered a maximum of 1.6% and a minimum of 1.58%, averaging 1.598%. Some institutions requested a return of 2%, which was rejected by the CBE.
The CBE started issuing euro-denominated T-bonds in 28 August 2018. The first interest to be offered on these bonds at the time was 3.25%.
Banks subscribe to euro-denominated bonds in the same way they subscribe in local currency T-bonds. Each bank makes its offer to the CBE, including the interest rate it seeks and the amount it aims to buy, and the CBE then reviews the proposals and accepts what it deems suitable.
Banks operating in the domestic market rely heavily on these bonds to invest their liquidity in euros in a government-guaranteed pot with an adequate return, with no other investment available for that liquidity, except rare syndicated loans offered on lengthy periods, and investing in global financial markets, with a low return and high risk.