T-Bill Yields in Egypt Haven't Been This Low Since the Float

(Bloomberg) -- Egypt has hit another milestone in its turnaround story.

The yield on the nation’s one-year Treasury bill has fallen to 16.7 percent, the lowest since Oct. 20, 2016, two-weeks before Egypt loosened controls on the currency. For Mohamed Abu Basha, a Cairo-based economist at investment bank EFG-Hermes, it’s a sign that some investors anticipate an interest-rate cut when policy makers meet next week.

But do lower yields mean that foreigners who put over $19 billion into Egyptian T-bills will start unwinding their trades and look for opportunities elsewhere? Not necessarily.

“If investors take their money out of Egypt, they have to put it somewhere else,” Abu Basha said. “What other opportunities are there in frontier and emerging markets that provide similar returns given Egypt’s relatively low risk?”

The average yield on local-currency government debt in developing nations is about 5 percent, compared with an average of 15 percent for Egyptian bonds.

To contact the reporter on this story: Ahmed Feteha in Cairo at afeteha@bloomberg.net.

To contact the editors responsible for this story: Alaa Shahine at asalha@bloomberg.net, Dana El Baltaji, Abbas Al Lawati

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