Yields on Egyptian bonds tumbled at an auction on Monday, following a steady decline in yields of short-term debt since the army ousted Islamist President Mohamed Mursi on July 3.
The average yield on three-year bonds slid by more than one percentage point to 13.76 percent from 14.78 percent at the last auction on July 29.
The yield on the seven-year bond declined to 15.02 percent from 15.75 at the last auction.
The central bank said it accepted bids worth 1 billion Egyptian pounds for the three-year bonds and 1.5 billion pounds for the seven-year bonds. It sold the entire amount it had offered.
‘Investors remain optimistic and appetite is strong for longer dated issues,’ said one Cairo-based fixed-income trader.
‘It seems that the market is not giving much weight to the current short-term risks,’ he added.
Thousands of Mursi’s supporters remain defiant in fortified protest camps in anticipation of a crackdown. Authorities are keen to end the sit-ins but risk more bloodshed and turmoil if they resort to force.
Last week, yields on 10-year Egyptian treasury bonds slid to their lowest in 30 months and treasury bill yields dropped for the fifth week in a row.
‘Today’s drop is just a continuation of the rally taking place,’ the trader said, adding a recent central bank rate cut continued to boost investor appetite.
Egypt’s central bank had unexpectedly lowered its main overnight interest rate by 50 basis points at a policy meeting on Aug 1, saying it was more concerned about boosting growth than taming resurgent inflation.
Source : Reuters
