Egypt's Ministry of Finance earlier this month canceled the auction of three- and seven-year treasury bonds — valued at 3.5 billion Egyptian pounds (around $196.6 million) — over banks' request for higher returns. The Sept. 3 order is the second consecutive cancellation of T-bond sales in 2018 aimed at preventing the state treasury from incurring the heavy financial burden of debt service on the bonds. The tender was canceled even though it was covered 1.6 times, at 5.7 billion Egyptian pounds (about $317.8 million).

“The requested interest rates were not within the logical limits and reflected neither the good economic and financial performance nor the improvement in Egypt's credit rating,” the Finance Ministry commented in a press statement obtained by Al-Monitor. The high interest rates requested by banks were more the result of the risks related to the emerging markets, the ministry added.

In July 2017, the Finance Ministry had canceled bids to sell three- and eight-year T-bonds totaling 3.5 billion Egyptian pounds (around $196.6 million) as banks and investors requested higher interest rates. “The prices were not appropriate,” Assistant Finance Minister Khaled Abdel Rahman told Reuters at the time. "We will accept the prices that suit us.” 

According to Finance Minister Mohamed Maait, for the current 2018/19 budget, Egypt is planning to lower the interest rates on government debt instruments to 14.7%, compared to 18.5% under the 2017/18 budget. Banks have reportedly been seeking rates varying between 18% and 18.5%, which prompted the Finance Ministry to twice cancel auctions this year.