The Central Bank of Egypt (CBE) said it had received 37 bids worth €780.1m from local and foreign financial institutions to invest in its Euro-denominated treasury bills (T-bills) auction on Monday.
The CBE accepted 23 of the bids, with a total of €610m.
The CBE has issued this auction, on behalf of the Ministry of Finance, the auction was issued for 364 days, as the maturity date is due on 18 August 2020.
The minimum yield accepted by the CBE in this auction dropped to 1.4%, while the maximum yield registered at 1.5%, and the weighted average yield was 1.49%. This is down from 1.725% as maximum, 1.75% as the minimum, and 1.75% as the average in the last similar auction by the CBE on 13 November 2018.
Some institutions demanded a yield of 2%, which was rejected by the CBE.
The auction proceeds went to pay an earlier auction issued by the CBE on 21 August 2018 worth €617.8m.
The CBE started offering euro-denominated T-bills in euros on 28 August 2012, with the first yield granted by the Ministry of Finance on the bills at 3.25%.
The central bank allows the subscription of euro-denominated T-bills to both local banks and foreign institutions with a minimum subscription of €100,000 and multiples.
Banks subscribe to euro-denominated T-bills in the same way they subscribe in local currency t-bills. Each bank submits an offer to the CBE with yield bid, and the amount the bank aims to buy, CBE then reviews the bids and accepts what it deems suitable.
Banks operating in the domestic market rely heavily on these bills to invest their liquidity in euros in a government-guaranteed pot with an adequate return, with no other investment available for that liquidity, except rare syndicated loans offered on lengthy periods, or investing in global financial markets, with a low return and high risk.