Yields on Egypt’s 18-month, three-year, and seven-year Treasury bonds are likely to rise by no more than 20 basis points at an auction on Monday, bankers said, despite a 50 basis point rise in interest rates just four days ago.
The bond auction is the first since the central bank’s monetary policy committee (MPC) raised interest rates on Thursday, citing inflationary pressures.
That fuelled expectations that government debt yields would increase by at least 50 basis points and bankers were surprised on Sunday when a sale of three and nine-month T-bills saw yields rise by less than 20 basis points.
Bankers have cited aggressive bidding by state banks as a reason why yields have risen less than expected at auction, which would add to the government’s debt burden.
Monday’s auction is expected to have a similar result, bankers said, adding that state banks had informed other banks that the yields will not rise by more than 20 basis points.
“It has been done before when state banks want to keep the auction yields under control,” one banker said.
“They do that sometimes to inform banks that they will keep yields within (a range) so if the other banks want to be accepted they should stay within that range,” he said.
Official auction results were expected later in the afternoon.
Yields on Egypt’s zero-coupon 1.5 year, and three-year treasury bonds rose marginally to 11.844, and 12.521 percent, respectively, at the previous auction on Dec. 14. While yields on the seven-year bonds dropped marginally to 14.43 percent.