Everyone wants a piece of Egypt: Foreign investors have poured over USD 3 bn into Egypt since the central bank floated the EGP and announced a jumbo 600 bps rate hike over a week ago, a government source told Enterprise. The number is expected to jump to USD 30 bn before the end of the year, they added.

Another successful EGP t-bill auction: The CBE raised EGP 217.9 bn-worth of one-year t-bills and EGP 46.8 bn-worth of six-month t-bills on Thursday, according to data on the bank’s website. The bank’s one-year bills received offers over 13x its original ask and its six-month bills 4x its ask.The average yield for the one-year bills dropped down to 30.14% from 32.30% the week before, while the six-month bills’ average yield dropped to 29.91% from 31.84% the week before.

Why the love for EGP t-bills? Investors have been loving Egypt’s short-term debt instruments post-float and their confidence was affirmed after JPMorgan and Citigroup recommended buying one-year EGP t-bills. And the CBE has been taking full advantage of that, auctioning off EGP bns worth of t-bills since the float.

Bonds have been having a tougher time: Last week, the government declined all bids in an auction of local currency t-bonds, reluctant to meet the high interest rates demanded by investors. Higher pricing on longer-term instruments generally reflects investors’ views of risk on that time horizon — but can also simply be a case of investors waiting to lock in better returns by seeing whether they can bid up the yield.

Bills or bonds?The government is currently looking into what kind of local debt investors prefer to help it decide on what local debt instruments to lean more towards moving forward. The government will work to extend the average maturity of medium-term debt to 4-5 years, instead of three, the source added.

ALSO- Euroclear talks back on the table: Talks between the Madbouly government and European clearinghouse Euroclear have resumed after breaking down in November due to disagreements about the taxation of Egyptian debt, our source said. We have for years been in talks to make our debt “euroclearable,” a step that would make local-currency bonds more accessible to foreign investors and boost capital inflows.

OTHER SIGNS THE FLOAT IS DOING ITS JOB-

More foreign currency inflows at the state’s FX bureaus: Customers have sold over EGP 2.3 bn worth of foreign currency at the National Bank of Egypt’s foreign currency exchange bureau Al Ahly Exchange, Banque Misr’s Misr Exchange, and Banque du Caire’s Cairo Exchange, Al Borsa reported yesterday. Most of the transactions at the bureaus were USD sales, with SAR and EUR accounting for a smaller portion of the transactions.

Demand for the USD is on the decline thanks to a better supply of the hard currency in banks and a faster release of goods stuck at ports, CBE governor Hassan Abdalla said during a meeting that covered the “positive indicators” of the size of FX inflows.

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