(MENAFN - Khaleej Times) Egypt cancelled the sale of six billion Egyptian pounds (969 million) of treasury bills three days after a ratings cut at Standard & Poor's raised borrowing costs. The pound weakened the most in two weeks.
The country was planning to raise two billion pounds in six-month notes and four billion pounds in one-year securities, according to central bank data on Bloomberg. It sold similar maturity notes last week at average yields of 13.3 per cent and 13.54 per cent. The pound, subject to a managed float, depreciated 0.2 per cent, the biggest intraday drop since December 13, to 6.1915 a dollar as of at 1:49pm in Cairo.
S&P cut Egypt to B-, six levels below investment grade, on December 24 on concern political instability will hinder the government's ability to take steps to boost the economy. Six- month bills traded in the secondary market yielded 13.48 per cent on Wednesday, up 37 basis points, or 0.37 percentage point, since the downgrade, according to prices compiled by Bloomberg. The one-year yield rose five basis points to 13.61 per cent.
"It's natural for investors to demand higher returns after S&P's rating downgrade," Sherif Othman, Cairo-based head of treasury at Arab Banking, said by phone before the auction was cancelled. "The dispute between the government and opposition in the absence of dialogue isn't an encouraging sign for anyone."
The Finance Ministry and the central bank typically don't announce reasons for debt-sale cancellations.