The EGX yesterday began allowing investors to trade treasury bills in the secondary market in a bid to boost trading, the bourse and the ce ntral ban k (pdf) said in statements.

Until yesterday, Egypt only had a primary market for local t-bill issuances: This means investors were only able to buy new bills issued for the first time directly from the Central Bank of Egypt.

Now, they’re able to trade them locally: A secondary market allows traders to buy and sell debt after it has been issued, either by a central bank or a company.

The rationale: “Trading treasury bills through the stock exchange increases demand, facilitates trading operations, and serves as an additional attraction for investors,” said EGX head Ahmed El Sheikh.

The first session: Traders bought and sold EGP 33.9 bn worth of t-bills during the first session, the EGX said.

Remember: The secondary market isn’t new. Traders have been able to trade government bonds (which have longer tenors than t-bills) and corporate bonds on the secondary market prior to yesterday’s decision.

Will this mean more foreign inflows into t-bills? Not in the short term. Foreign appetite is unlikely to return to the local debt market until we address the FX overhang. What this means, though, is that we’ll have a much more interesting, transparent, and functional market — on par with the EGX for equities — when international buyers come back into the market.

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