Egypt sells record 1-year debt as aid pledges boost confidence

Egypt sold the most one-year treasury bills on record, exceeding its target by 50 percent, as investors bet the country will secure enough external financing to avoid a currency devaluation.

The Finance Ministry raised 6 billion pounds ($984 million) at an auction of the one-year securities today, two billion more than it sought, according to central bank data on Bloomberg. That’s the biggest issuance since Bloomberg started tracking the sales in 2006. The ministry also exceeded its six-month bill sale target by 36 percent, selling 3.4 billion pounds.

Aid pledges by Qatar and Turkey, as well the government’s plan to conclude an $4.8 billion International Monetary Fund loan agreement before the end of the year, have reignited demand from foreign investors, who dumped local-currency debt after last year’s uprising. Foreigners bought “10 percent or more” of bonds auctioned on Sept. 23, Nidal Assr, head of the central bank’s foreign-exchange management unit, said the following day.

Today’s auction “reflects the increased confidence in Egypt with a stronger outlook for IMF support and positive political development, which reduces fears of a sharp devaluation in the Egyptian pound,” Monica Malik, Dubai-based chief economist at EFG-Hermes Holding SAE, said by phone. “The auction results were likely helped by an increase in foreign flows back into the T-bill market.”

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