Yields on Treasury bonds continued yesterday their declining trend seen since the beginning of the year. Yields dropped on the three-year bond by 17bps to 17.936% and 16bps to 17.927% for the seven-year issuance. Capitalising on the lower yields, the government issued more than three times the original target in the case of three-year bonds: instead of EGP1bn offered, it raised EGP3.6bn. Issuance of the seven-year bond matched the original target of EGP0.75bn. Treasury yields have been on the decline since the beginning of the year, likely driven by: i) improved liquidity conditions as CBE eased its open market operations in the past few weeks; ii) banks loading their portfolios with Treasuries ahead of the approval of the tax on Treasuries; and iii) a risk-off attitude towards emerging markets, leading to foreign inflows into the market for the first time in more than seven months. 

Mohamed Abu Basha