International and local banks and financial institutions offered to invest €1.1422bn in the treasury bills auction the Central Bank of Egypt (CBE) offered on Monday in euros, according to the CBE.
On behalf of the Ministry of Finance, the CBE offered a treasury bills auction worth €700m, the second time treasury bills were offered in euro this year. It received about €1.1422bn from local and international banks and institutions to invest in these bills.
The CBE accepted €732.2m out of this liquidity. The interest rate that will be granted to investors for these bills ranges between 2.209% and 2.29%, with an average of 2.283%, which is almost the same return granted in a similar auction offered in August. The first rate granted by the Ministry of Finance on the bills in euros in 2012 amounted to about 3.25%.
According to the CBE, these bills were offered to pay for an old bills auction offered on 18 November 2014 with € 734.3m, which is maturing on 17 November 2015. The new bills will be offered for a year and will mature on 15 November 2016.
The CBE began to offer treasury bills in euros on 29 August 2012. According to their latest numbers, the total outstanding balance of those bills reached the equivalent of about EGP 11.346bn until the end of last June.
The CBE allows subscription to bills in euros for local banks and foreign institutions with a minimum subscription of €100,000, and its multiples.
Banks can subscribe to bills in euros in the same manner as local currency, where each bank submits its bid to the CBE, indicating the amount with which it will subscribe in bills and the interest rate it demanded. These bids are being collected at the CBE to study and to accept the suitable ones.
Banks operating in the local market rely on these bills to invest a significant amount of their liquidity in euros in a scheme guaranteed by the government, with an appropriate return in light of the lack of other investment tools for this liquidity. Exceptions include rare syndicated loans, which are proposed infrequently, or investment in global capital markets, which have a low return, and are surrounded by risks.