Outstanding balances of treasury bills (T-Bills) and treasury bonds (T-Bonds) in the local currency owed by the government till the end of March 2019 amounted to EGP 1.852tn, according to the ministry of finance.
Banks working in the Egyptian market are the largest investing sectors in the T-Bills and T-Bonds regularly offered by the government in order to cover the state’s budget deficit.
These bonds and bills are launched through 15 banks taking part in the primary dealers system in the primary market. These banks resell part of them in the secondary market to individual and institutional local and foreign investors.
In a recent report, the ministry of finance explained that the total outstanding balances by the end of March 2019 reached EGP 1.158tn, including EGP 87.07bn for 910-day T-Bills, EGP 218.48bn for 182-day T-Bills, EGP 314.244bn for 273-day T-Bills, and EGP 538.255bn for 364-day T-Bills.
According to the ministry, these T-Bills and T-Bonds are due from the period of 2 April 2019 to 24 March 2020.
Regarding the local T-Bonds, the ministry explained that they amounted to EGP 694.4416bn by the end of March 2019, and were repaid during the period from 3 April 2019 to 6 November 2028.
There are also other bonds offered in global markets, worth $23.21bn.
According to the ministry, the first issuance of these bonds is in 29 April 2020, until 1 March 2049. The interest rate on them ranges between 5.75% and 8.7002%, with an average of 7.106%.
There are also other bonds worth €2bn, due on 16 April 2026 and 16 April 2030, with a yield ranging from 4.75% to 5.625%.
This April, the ministry added other international bonds worth €2bn, taking the total state’s balance of international bonds in the European currency to €4bn.
The new bonds were issued in two segments. The first for six years, worth €650m and 4.750% yield due on 11 April 2025, and the second for 12 years, worth €1.25bn with 6.375%, due on 11 April 2031.
Moreover, the ministry of finance recently signed a memorandum of understanding with Euroclear Bank, whereby Egyptian public debt instruments will be included in the local currency in the bank, to enhance the attractiveness of Egyptian debt instruments.
According to the ministry’s statement, this step aims to provide transactions on government debt instruments for a larger segment of foreign investors, especially central banks which have major investments and prefer to deal in long-term government securities.
According to the banking expert Mohamed Abdelaal, Euroclear is one of the largest banks maintaining investments in bonds, noting that offering debt instruments requires a custodian who carries out the offerings process, according to this agreement.
Abdelaal expected the government’s agreement with Euroclear to contribute toward increasing the attractiveness of Egyptian debt instruments and their demand on offerings in government debt instruments.