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Why is Egypt canceling T-bond auctions?

For the second time this year, the Egyptian government canceled the sale of treasury bonds after banks demanded higher interest rates.
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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.

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