By: Heba El-Kordy

Cairo – Mubasher: The yield on 91-day treasury bills (T-bills) offered by the Central Bank of Egypt (CBE) on Sunday retreated to its lowest level since October 2016 in the first auction of T-bills after cutting interest rates, according to a survey conducted by Mubasher.

On 14 November, the CBE decided to lower interest rates by 100 basis points (bps), reducing the overnight deposit rate, the overnight lending rate, and the rate of the main operation to 12.25%, 13.25%, and 12.75%, respectively.  

Despite the rate cut, the yield on the 91-day and 266-day T-bills edged down, when compared to the previous two auctions.

According to data released by the CBE, the yield on the 91-day T-bills averaged 15.38% after EGP 9.25 billion worth of T-bills have been accepted, hitting its lowest level since October 2016 when the yield on 91-day T-bills reached 14.59%.

Prior to the rate cut, the average yield on 91-day notes registered 15.878% in an auction last week.

In addition, the average yield on 266-day notes inched down to 15.09% after EGP 5.9 billion worth of bids have been accepted, compared to an average yield of 15.512% on 273-day notes offered last week.

In a reseach notes, economic analyst at Beltone Financial, Alia Mamdouh, expected that the rate cut will not be fully reflected on the yield on T-bonds which will likely be stable with the increase in lending corridor rate.

The T-bonds will remain attractive on the back of the strengthening of the Egyptian pound and the rising real interest rates due to the slowdown in inflation rates, she noted. 

In October, Egypt signed an agreement with Euroclear Bank in a bid to make Egyptian debt instruments more accessible to foreign investors.  

Translated by: Zeinab Adel